CONSOLIDATED FINANCIAL STATEMENTS OF
SAMSUNG ELECTRONICS CO., LTD. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Auditors.................................................................................
1
Consolidated Financial Statements
Consolidated Statements of Financial Position...............................................................
2-4
Consolidated Statements of Income.................................................................................
5
Consolidated Statements of Comprehensive Income ....................................................
6
Consolidated Statements of Changes in Equity...............................................................
7 - 10
Consolidated Statements of Cash Flows .........................................................................
11 - 12
Notes to the Consolidated Financial Statements
13 - 86
...........................................................
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of
Samsung Electronics Co., Ltd.
We have audited the accompanying consolidated financial statements of Samsung Electronics Co., Ltd.
and its subsidiaries (collectively referred to as the “Company”), which comprise the consolidated
statements of financial position as of December 31, 2012, December 31, 2011, and January 1, 2011,
the related consolidated statements of income, comprehensive income, changes in equity and cash
flow for the years ended December 31, 2012 and 2011, and the related notes. These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. We did not audit the financial
statements of certain subsidiaries, whose financial statements represents 7.2% and 7.6% of the
consolidated total assets as of December 31, 2012 and 2011, respectively, and 22.1% and 20.4% of the
consolidated total sales for the year then ended, respectively. Those financial statements were audited
by other auditors whose reports thereon have been furnished to us, and our opinion expressed herein,
insofar as it relates to the amounts included for those subsidiaries, is based solely on the reports of the
other auditors.
We conducted our audits in accordance with auditing standards generally accepted in the Republic of
Korea. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe that our audits and the
reports of the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Samsung Electronics Co., Ltd. and its
subsidiaries as of December 31, 2012, December 31, 2011, and January 1, 2011, and their financial
performance and cash flows for the years ended December 31, 2012 and 2011, in accordance with
International Financial Reporting Standards as adopted by the Republic of Korea.
Seoul, Korea
February 1, 2013
This report is effective as of February 1, 2013, the audit report date. Certain subsequent events or circumstances,
which may occur between the audit report date and the time of reading this report, could have a material impact
on the accompanying financial statements and notes thereto. Accordingly, the readers of the audit report should
understand that there is a possibility that the above audit report may have to be revised to reflect the impact of
such subsequent events or circumstances, if any.
1
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In millions of Korean Won, in thousands of U.S dollars (Note 2.28))
Notes
Assets
Current Assets
Cash and cash equivalents
Short-term financial instruments
Available-for-sale financial assets
Trade and other receivables
Advances
Prepaid expenses
Inventories
Other current assets
Total current assets
Non-current assets
Available-for-sale financial assets
Associates and joint ventures
Property, plant and equipment
Intangible assets
Deposits
Long-term prepaid expenses
Deferred income tax assets
Other non-current assets
Total assets
4,6,7
5,6,7
6,9
6,7,10
11
6
6,9
12
13
14
6
29
6
December 31,
2012
KRW
December 31,
2011
KRW
18,791,460
17,397,937
1,258,874
26,674,596
1,674,428
2,262,234
17,747,413
1,462,075
87,269,017
14,691,761
11,529,905
655,969
24,153,028
1,436,288
2,329,463
15,716,715
988,934
71,502,063
5,229,175
8,785,489
68,484,743
3,729,705
814,693
3,515,479
2,516,080
727,189
181,071,570
January 1,
2011
KRW
December 31,
2012
USD
December 31,
2011
USD
9,791,419
11,529,392
1,159,152
21,308,834
1,302,428
2,200,739
13,364,524
746,101
61,402,589
17,544,076
16,243,056
1,175,309
24,903,927
1,563,279
2,112,066
16,569,333
1,365,023
81,476,069
13,716,517
10,764,546
612,426
22,549,741
1,340,947
2,174,832
14,673,434
923,288
66,755,731
9,141,461
10,764,067
1,082,207
19,894,346
1,215,972
2,054,653
12,477,382
696,575
57,326,663
3,223,598
9,204,169
62,043,951
3,355,236
791,863
3,454,205
1,783,086
442,092
3,040,206
8,335,290
52,964,594
2,779,439
655,662
3,544,572
1,144,068
442,383
4,882,060
8,202,305
63,938,701
3,482,126
760,613
3,282,120
2,349,062
678,919
3,009,614
8,593,193
57,925,451
3,132,514
739,299
3,224,914
1,664,724
412,746
2,838,396
7,781,990
49,448,785
2,594,939
612,139
3,309,282
1,068,124
413,018
155,800,263
134,308,803
169,051,975
145,458,186
125,393,336
The accompanying notes are an integral part of these financial statements.
2
January 1,
2011
USD
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In millions of Korean Won, in thousands of U.S dollars (Note 2.28))
December 31,
December 31,
January 1,
December 31,
December 31,
January 1,
2012
KRW
2011
KRW
2011
KRW
2012
USD
2011
USD
2011
USD
16,889,350
8,443,752
1,517,672
966,374
9,495,156
3,222,934
18,509,490
9,653,722
1,450,733
1,715,070
7,823,728
1,262,798
16,049,800
8,429,721
883,585
1,052,555
7,102,427
2,051,452
15,768,229
7,883,253
1,416,928
902,226
8,864,864
3,008,994
17,280,823
9,012,904
1,354,433
1,601,223
7,304,386
1,178,973
14,984,409
7,870,153
824,932
982,686
6,630,965
1,915,276
6,15,16
18
6
999,010
5,054,853
343,951
46,933,052
30,292
3,514,536
358,645
44,319,014
1,123,934
2,917,919
333,328
39,944,721
932,695
4,719,310
321,120
43,817,619
28,281
3,281,240
334,839
41,377,102
1,049,327
2,724,226
311,202
37,293,176
6
6,16
6,15
17
29
18
6
1,165,881
1,829,374
3,623,028
1,729,939
3,429,467
408,529
472,094
59,591,364
1,024,804
1,280,124
3,682,472
1,119,188
2,333,442
363,223
364,366
54,486,633
1,072,661
587,338
634,381
823,486
1,618,523
295,357
154,700
45,131,167
1,088,489
1,707,940
3,382,530
1,615,105
3,201,818
381,411
440,757
55,635,669
956,777
1,195,149
3,438,028
1,044,896
2,178,547
339,112
340,180
50,869,791
1,001,457
548,350
592,271
768,823
1,511,085
275,751
144,431
42,135,344
Notes
Liabilities and Equity
Current liabilities
Trade and other payables
Short-term borrowings
Advance received
Withholdings
Accrued expenses
Income tax payable
Current portion of long-term borrowings
and debentures
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term trade and other payables
Debentures
Long-term borrowings
Retirement benefit liabilities
Deferred income tax liabilities
Provisions
Other non-current liabilities
Total liabilities
6
6,15
6
The accompanying notes are an integral part of these financial statements.
3
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In millions of Korean Won, in thousands of U.S dollars (Note 2.28))
December 31,
2012
KRW
December 31,
2011
KRW
119,467
778,047
4,403,893
119,985,689
(8,193,044)
119,467
778,047
4,403,893
97,622,872
(5,833,896)
4,386,154
Total equity
Total liabilities and equity
Notes
Equity attributable to owners
of the parent
Preferred stock
Common stock
Share premium
Retained earnings
Other components of equity
Non-controlling interests
20
20
20
21
23
January 1,
2011
KRW
December 31,
2012
USD
December 31,
2011
USD
119,467
778,047
4,403,893
85,071,444
(4,931,290)
111,537
726,400
4,111,561
112,020,996
(7,649,185)
111,537
726,400
4,111,561
91,142,630
(5,446,639)
111,537
726,400
4,111,561
79,424,371
(4,603,949)
4,223,247
3,736,075
121,480,206
101,313,630
89,177,636
4,094,997
113,416,306
3,942,906
94,588,395
3,488,072
83,257,992
181,071,570
155,800,263
134,308,803
169,051,975
145,458,186
125,393,336
The accompanying notes are an integral part of these financial statements.
4
January 1,
2011
USD
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In millions of Korean Won, in thousands of U.S dollars (Note 2.28))
Notes
Revenue
Cost of sales
25
Gross profit
Selling, general and administrative
expenses
Operating profit
Other non-operating income
Other non-operating expense
Share of profit or loss of
associates and joint ventures
Finance income
Finance expense
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to owners of the
parent
Profit attributable to non-controlling
interests
Earnings per share for profit
attributable to the owners of the parent
- Basic
(in Korean won and US dollars)
- Diluted
(in Korean won and US dollars)
25,26
27
27
12
28
28
29
2012
KRW
For the year ended December 31,
2011
2012
KRW
USD
2011
USD
201,103,613
126,651,931
74,451,682
165,001,771
112,145,120
52,856,651
187,754,283
118,244,730
69,509,553
154,048,895
104,700,887
49,348,008
45,402,344
37,212,360
42,388,520
34,742,191
29,049,338
1,552,989
1,576,025
15,644,291
2,251,019
1,612,690
27,121,033
1,449,901
1,471,408
14,605,817
2,101,596
1,505,639
986,611
7,836,554
7,934,450
29,915,017
6,069,732
23,845,285
1,399,194
7,403,525
7,893,421
17,191,918
3,432,875
13,759,043
921,119
7,316,361
7,407,758
27,929,248
5,666,822
22,262,426
1,306,315
6,912,076
7,369,453
16,050,712
3,204,999
12,845,713
23,185,375
13,382,645
21,646,322
12,494,300
659,910
376,398
616,104
351,413
154,020
89,229
143.80
83.31
153,950
89,146
143.73
83.23
30
The accompanying notes are an integral part of these financial statements.
5
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions of Korean Won, in thousands of U.S dollars (Note 2.28))
For the year ended December 31,
Notes
Profit for the year
Items not to be reclassified subsequently
to profit or loss :
Remeasurement effect of employee benefit,
net of tax
Items to be reclassified subsequently
to profit or loss :
Changes in value of available-for-sale
financial assets, net of tax
Share of associates and joint ventures,
net of tax
Foreign currency translation, net of tax
Consolidated comprehensive income
Consolidated comprehensive income
attributable to :
Owners of the parent
Non-controlling interests
2012
2011
2012
2011
KRW
KRW
USD
USD
23,845,285
13,759,043
22,262,426
12,845,713
(504,120)
(385,214)
(470,656)
(359,643)
962,184
(572,028)
898,314
(534,057)
23
(350,491)
(113,898)
(327,225)
(106,337)
23
(1,824,653)
22,128,205
183,655
12,871,558
(1,703,532)
20,659,327
171,463
12,017,139
21,499,343
628,862
12,439,116
432,442
20,072,209
587,118
11,613,403
403,736
17,23
23
The accompanying notes are an integral part of these financial statements.
6
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In millions of Korean Won)
2011 KRW
Balance at January 1, 2011
Cumulative effect of change in
accounting policy
Revised balance at January 1, 2011
Profit for the year
Available-for-sale financial assets,
net of tax,
Share of associates and joint ventures,
net of tax
Foreign currency translation, net of tax
Remeasurement effect of employee
benefit, net of tax
Total comprehensive income
Dividends
Capital transaction under common
control
Effect of business combination
Disposal of treasury stock
Stock option activities
Others
Total transactions with owners
Balance at December 31, 2011
Notes
Preferred
stock
Common
stock
Share
premium
Retained
earnings
Other
reserves
Equity
attributable
to owners of
the parent
Noncontrolling
interests
Total
119,467
778,047
4,403,893
85,014,550
(4,726,398)
85,589,559
3,759,532
89,349,091
-
-
-
56,894
(204,892)
(147,998)
(23,457)
(171,455)
119,467
-
778,047
-
4,403,893
-
85,071,444
13,382,645
(4,931,290)
-
85,441,561
13,382,645
3,736,075
376,398
89,177,636
13,759,043
-
-
-
-
(567,186)
(567,186)
(4,842)
(572,028)
-
-
-
-
(113,898)
(113,898)
-
(113,898)
-
-
-
-
123,434
123,434
60,221
183,655
17
-
-
-
-
(385,879)
(385,879)
665
(385,214)
22
-
-
-
13,382,645
(824,478)
(943,529)
-
12,439,116
(824,478)
432,442
(156,388)
12,871,558
(980,866)
-
-
-
-
(108,840)
(108,840)
78,155
(30,685)
119,467
778,047
4,403,893
(6,739)
(831,217)
97,622,872
288,773
(73,008)
(66,002)
40,923
(5,833,896)
288,773
(73,008)
(72,741)
(790,294)
97,090,383
131,564
1,399
54,730
4,223,247
131,564
288,773
(73,008)
(71,342)
(735,564)
101,313,630
2
9,23
12
23
24
The accompanying notes are an integral part of these consolidated financial statements.
7
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands of U.S dollars (Note 2.28))
2011 USD
Balance at January 1, 2011
Cumulative effect of change in
accounting policy
Revised balance at January 1, 2011
Profit for the year
Available-for-sale financial assets,
net of tax
Share of associates and joint ventures,
net of tax
Foreign currency translation, net of tax
Remeasurement effect of employee
benefit, net of tax
Total comprehensive income
Dividends
Capital transaction under common
control
Effect of business combination
Disposal of treasury stock
Stock option activities
Others
Total transactions with owners
Balance at December 31, 2011
Notes
Preferred
stock
Common
stock
Share
premium
Retained
earnings
Other
reserves
Equity
attributable
to owners of
the parent
Noncontrolling
interests
Total
111,537
726,400
4,111,561
79,371,254
(4,412,658)
79,908,094
3,509,972
83,418,066
-
-
-
53,117
(191,291)
(138,174)
(21,900)
(160,074)
111,537
-
726,400
-
4,111,561
-
79,424,371
12,494,300
(4,603,949)
-
79,769,920
12,494,300
3,488,072
351,413
83,257,992
12,845,713
-
-
-
-
(529,536)
(529,536)
(4,521)
(534,057)
-
-
-
-
(106,337)
(106,337)
-
(106,337)
-
-
-
-
115,240
115,240
56,224
171,464
17
-
-
-
-
(360,264)
(360,264)
621
(359,643)
22
-
-
-
12,494,300
(769,749)
(880,897)
-
11,613,403
(769,749)
403,737
(146,007)
12,017,140
(915,756)
-
-
-
-
(101,615)
(101,615)
72,967
(28,648)
111,537
726,400
4,111,561
(6,292)
(776,041)
91,142,630
269,604
(68,162)
(61,620)
38,207
(5,446,639)
269,604
(68,162)
(67,912)
(737,834)
90,645,489
122,831
1,306
51,097
3,942,906
122,831
269,604
(68,162)
(66,606)
(686,737)
94,588,395
2
9,23
12
23
24
The accompanying notes are an integral part of these consolidated financial statements.
8
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In millions of Korean Won)
2012 KRW
Balance at January 1, 2012
Profit for the year
Available-for-sale financial assets,
net of tax
Share of associates and joint ventures,
net of tax
Foreign currency translation, net of tax
Remeasurement effect of employee
benefit, net of tax
Notes
Common
stock
Share
premium
Retained
earnings
Other
reserves
Noncontrolling
interests
Total
119,467
-
778,047
-
4,403,893
-
97,622,872
23,185,375
(5,833,896)
-
97,090,383
23,185,375
4,223,247
659,910
101,313,630
23,845,285
9,23
-
-
-
-
960,688
960,688
1,496
962,184
12
-
-
-
-
(350,491)
(1,789,877)
(350,491)
(1,789,877)
(34,776)
(350,491)
(1,824,653)
-
-
-
-
(506,351)
(506,351)
2,231
(504,120)
-
-
-
(1,686,031)
21,499,344
628,861
22,128,205
-
-
-
(827,501)
-
(827,501)
(373,632)
(1,201,133)
119,467
778,047
4,403,893
4,943
(822,558)
119,985,689
(1,089,835)
455,377
(33,071)
(5,588)
(673,117)
(8,193,044)
(1,089,835)
455,377
(33,071)
(645)
(1,495,675)
117,094,052
(104,395)
12,844
(771)
(465,954)
4,386,154
(1,194,230)
12,844
455,377
(33,071)
(1,416)
(1,961,629)
121,480,206
17
Total comprehensive income
Dividends
Capital transaction under common
control
Effect of business combination
Disposal of treasury stock
Stock option activities
Others
Total transactions with owners
Balance at December 31, 2012
Preferred
stock
Equity
attributable
to owners of
the parent
22
23
24
23,185,375
The accompanying notes are an integral part of these consolidated financial statements.
9
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands of U.S dollars (Note 2.28))
2012 USD
Balance at January 1, 2012
Profit for the year
Available-for-sale financial assets,
net of tax
Share of associates and joint ventures,
net of tax
Foreign currency translation, net of tax
Remeasurement effect of employee
benefit, net of tax
Total comprehensive income
Dividends
Capital transaction under common
control
Effect of business combination
Disposal of treasury stock
Stock option activities
Others
Total transactions with owners
Balance at December 31, 2012
Notes
Preferred
stock
Common
stock
Share
premium
Retained
earnings
Other
reserves
Equity
attributable
to owners of
the parent
Noncontrolling
interests
Total
111,537
-
726,400
-
4,111,561
-
91,142,630
21,646,322
(5,446,639)
-
90,645,489
21,646,322
3,942,906
616,104
94,588,395
22,262,426
9,23
-
-
-
-
896,917
896,917
1,397
898,314
12
-
-
-
-
(327,225)
(327,225)
-
(327,225)
-
-
-
-
(1,671,064)
(1,671,064)
(32,468)
(1,703,532)
-
-
-
21,646,322
(772,571)
(472,739)
(1,574,111)
-
(472,739)
20,072,211
(772,571)
2,083
587,116
(348,830)
(470,656)
20,659,327
(1,121,401)
111,537
726,400
4,111,561
4,615
(767,956)
112,020,996
(1,017,491)
425,149
(30,876)
(5,217)
(628,435)
(7,649,185)
(1,017,491)
425,149
(30,876)
(602)
(1,396,391)
109,321,309
(97,466)
11,991
(720)
(435,025)
4,094,997
(1,114,957)
11,991
425,149
(30,876)
(1,322)
(1,831,416)
113,416,306
17
22
23
24
The accompanying notes are an integral part of these consolidated financial statements
10
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of Korean Won, in thousands of U.S dollars (Note 2.28))
For the year ended December 31,
Notes
2012
KRW
2011
KRW
2012
USD
2011
USD
Cash flows from operating
activities
Profit for the year
23,845,285
13,759,043
22,262,426
12,845,713
31
22,759,559
16,450,629
21,248,771
15,358,630
31
(5,777,949)
(4,057,345)
(5,394,406)
(3,788,017)
40,826,895
26,152,327
38,116,791
24,416,326
Interest received
Interest paid
789,397
(576,379)
755,859
(641,462)
736,997
(538,119)
705,685
(598,882)
Dividend received
1,112,940
628,585
1,039,063
586,859
(4,180,044)
(3,977,408)
(3,902,572)
(3,713,385)
37,972,809
22,917,901
35,452,160
21,396,603
(5,965,611)
75,666
(5,569,612)
70,643
(589,072)
518,479
(549,969)
484,062
106,208
415,096
99,158
387,542
(870,249)
(419,678)
(812,482)
(391,820)
41,091
306,804
38,363
286,438
(279,022)
(403,538)
(260,500)
(376,751)
644,062
379,878
601,309
354,662
(22,965,271)
(21,965,678)
(21,440,828)
(20,507,588)
61,497
9,703
57,415
9,059
(650,884)
(663,678)
(607,678)
(619,623)
313,043
461,454
292,263
430,823
Payment for deposits
Cash outflows from business
combination
Cash inflows from disposal of
business
(347,746)
(594,067)
(324,662)
(554,633)
(464,279)
(522,740)
(433,460)
(488,040)
-
925,454
-
864,022
Others
(355,321)
364,281
(331,735)
340,100
(31,321,554)
(21,112,564)
(29,242,418)
(19,711,104)
Adjustments
Changes in operating assets and
liabilities
Cash flows from operating activities
Income tax paid
Net cash generated from operating
activities
Cash flows from investing activities
Net decrease(increase) in short-term
financial instruments
Net decrease(increase) in short-term
available-for-sale financial assets
Proceeds from disposal of long-term
available-for-sale financial assets
Acquisition of long-term availablefor-sale financial assets
Proceeds from disposal of associates
and joint ventures
Acquisition of associates and joint
ventures
Disposal of property and equipment
Purchases of property and equipment
Disposal of intangible assets
Purchases of intangible assets
Proceeds from deposits
Net cash used in investing activities
The accompanying notes are an integral part of these consolidated financial statements
11
Samsung Electronics Co., Ltd. and its subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions of Korean Won, in thousands of U.S dollars (Note 2.28))
For the year ended December 31,
Notes
Cash flows from financing activities
Net (repayment) proceeds from shortterm borrowings
Disposal of treasury stock
Proceeds from long-term borrowings
and debentures
Repayment of long-term borrowings
and debentures
Payment of dividends
Net increase (decrease) in Noncontrolling interests
Others
Net cash provided by (used in)
financing activities
2012
KRW
2011
KRW
(800,579)
88,473
977,315
160,827
(747,436)
82,600
912,440
150,151
1,862,256
3,925,406
1,738,639
3,664,836
(522,899)
(1,265,137)
(1,145,167)
(488,189)
(874,608) (1,181,157)
(1,069,150)
(816,551)
(1,200,134)
(26,488)
363,417 (1,120,469)
(297,461)
(24,729)
339,293
(277,715)
(1,864,508)
3,109,729 (1,740,741)
2,903,304
Effect of exchange rate changes on
cash and cash equivalents
Net increase (decrease) in cash and
cash equivalents
2012
USD
2011
USD
(687,048)
(14,724)
(641,442)
(13,747)
4,099,699
4,900,342
3,827,559
4,575,056
Cash and cash equivalents
Beginning of the year
14,691,761
9,791,419
13,716,517
9,141,461
End of the year
18,791,460
14,691,761
17,544,076
13,716,517
The accompanying notes are an integral part of these financial statements.
12
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General Information
1.1 Company Overview
Samsung Electronics Co., Ltd. ("SEC") was incorporated under the laws of the Republic of Korea in 1969 and listed
its shares on the Korea Stock Exchange in 1975.
SEC operates two business units: DMC and DS. The DMC division includes digital TVs, monitors, air conditioners
and refrigerators in the CE (Consumer `Electronics) business, and mobile phones, communication system, printers and
computers in the IM (Information technology & Mobile Communications) business. The DS division includes
products such as memory and system LSI in semiconductor business, and LCD display panels and OLED panels
designed for mobiles in the LCD and other LED business. The Company is domiciled in the Republic of Korea and
the address of its registered office is Suwon, the Republic of Korea.
These consolidated financial statements have been prepared in accordance with Korean International Financial
Reporting Standards (“K-IFRS”) 1027, Consolidated and Separate Financial Statements. SEC, as the controlling
Company, consolidates its 166 subsidiaries (collectively referred to as "the Company") including Samsung Display
and Samsung Electronics America. The Company also applies the equity method of accounting to its 34 affiliates,
including Samsung SDI.
1.2 Consolidated Subsidiaries
(A) The consolidated subsidiaries as of December 31, 2012 are as follows:
Area
Domestic
America
Subsidiaries
World Cyber Games
High Pioneer Private Investment Trust #1
Samsung Display (SDC)
SU Materials
STECO
SEMES
SECRON
Samsung Electronics Service
Living Plaza
Samsung Electronics Logitech
Samsung Electronics Football Club
GES
Samsung Medison
Ray
Samsung Venture Capital Union #6
Samsung Venture Capital Union #14
Samsung Venture Capital Union #20
Samsung Venture Capital Union #21
Samsung Venture Capital Union #22
Samsung Venture Capital Union #23
Samsung Electronics America (SEA)
NexusDX (Nexus)
Samsung Receivables (SRC)
Samsung Semiconductor (SSI)
Industry
Cyber game match hosting
Technology business venture capital investments
Manufacture and sales of LCD
Manufacture of electronic devices
Manufacture of semiconductor components
Manufacture of semiconductor/FPD
Semiconductor equipments
Repair service for electronic devices
Sale of consumer electronics
General logistics agency
Sponsoring of sports team and games
Semiconductor equipments
Medical equipments
Dental CT
Technology business venture capital investments
Technology business venture capital investments
Technology business venture capital investments
Technology business venture capital investments
Technology business venture capital investments
Technology business venture capital investments
Sale of electronic devices
Medical equipments
Credit managements
Sale of electronic devices
Samsung Electronics Canada (SECA)
Samsung Information Systems America
(SISA)
Sale of electronic devices
R&D
13
Percentage
of
ownership1
99.9
100.0
84.8
50.0
51.0
90.3
93.1
99.3
100.0
100.0
100.0
100.0
68.5
68.1
99.0
99.0
99.0
99.0
99.0
99.0
100.0
100.0
100.0
100.0
100.0
100.0
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Area
America
(Cont.)
Europe
Subsidiaries
Grandis
mSpot
Samsung Mexicana (SAMEX)
Samsung International (SII)
Samsung Telecommunications America
(STA)
Samsung Austin Semiconductor (SAS)
Samsung Electronics Mexico (SEM)
SEMES America (SEMESA)
Samsung Electronics Corporativo (SEC)
Samsung Electronics Digital Appliance
Mexico (SEDAM)
Samsung Electronics Latinoamerica Miami
(SEMI)
Nvelo
Newton Sub
Samsung Medison America (SMUS)
Samsung Electronics Latinoamerica (SELA)
Samsung Electronics Venezuela (SEVEN)
Industry
R&D
Software
Manufacture of electronic devices
Manufacture of CTV
Sales of communication equipment
Percentage
of
ownership1
100.0
100.0
100.0
100.0
100.0
Manufacture of semiconductor
Manufacture and sales of electronic devices
Semiconductor equipments
Consulting
Consulting
100.0
100.0
100.0
95.2
95.2
Sales of electronic devices
100.0
Software
Medical equipments
Medical equipments
Sales of electronic devices
Marketing and services
100.0
100.0
100.0
100.0
100.0
Samsung Electronica Colombia (SAMCOL)
Samsung Electronics Panama (SEPA)
Samsung Electronica da Amazonia (SEDA)
Samsung Electronics Argentina (SEASA)
Samsung Electronics Chile (SECH)
Samsung Electronics Peru (SEPR)
Samsung Medison Brasil (SMBR)
Deltapoint Cardiac Diagnostics (Deltapoint)
Samsung Electronics (UK) (SEUK)
Samsung Electronics Holding (SEHG)
Samsung Semiconductor Europe GmbH
(SSEG)
Samsung Electronics GmbH (SEG)
Samsung Electronics Iberia (SESA)
Sale of electronic devices
Consulting
Manufacture and sales of electronic devices
Marketing and services
Sale of electronic devices
Sale of electronic devices
Medical equipments
Medical equipments
Sale of electronic devices
Holding Company
Sale of semiconductor and LCD
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Sale of electronic devices
Sale of electronic devices
100.0
100.0
Samsung Electronics France (SEF)
Samsung Electronics Hungarian (SEH)
Samsung Electronics Czech and Slovak
(SECZ)
Samsung Electronics Italia (SEI)
Samsung Electronics Europe Logistics
(SELS)
Samsung Electronics Benelux (SEBN)
Samsung Display Slovakia (SDSK)
Samsung Electronics Romania (SEROM)
Samsung Electronics Overseas (SEO)
Samsung Electronics Polska (SEPOL)
Samsung Electronics Portuguesa (SEP)
Samsung Electronics Nordic (SENA)
Samsung Semiconductor Europe (SSEL)
Samsung Electronics Austria (SEAG)
Samsung Electronics Slovakia (SESK)
Sale and Marketing of electronic devices
Manufacture and sales of electronic devices
Sale of electronic devices
100.0
100.0
100.0
Sale of electronic devices
Logistics
100.0
100.0
Sale of electronic devices
Toll processing of LCD
Sale of electronic devices
Sale of electronic devices
Sale of electronic devices
Sale of electronic devices
Sale of electronic devices
Sale of semiconductor and LCD
Sale of electronic devices
Manufacture of CTV/monitor
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
14
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Area
Europe
(Cont.)
Middle East
and Africa
Subsidiaries
Samsung Electronics Europe Holdings
(SEEH)
Samsung Electronics Poland Manufacturing
(SEPM)
Samsung Electronics Greece (SEGR)
Samsung LCD Netherlands R&D Center
(SNRC)
Samsung LCD Netherlands R&D Center
UK (SNRC (UK))
Samsung Nanoradio Design Center (SNDC)
Nanoradio Hellas
General RF Modules
SonoAce Deutschland (SMDE)
Samsung Medison Italia (SMIT)
Samsung Medison France (SMFR)
Industry
Holding Company
Percentage
of
ownership1
100.0
Manufacture of home appliances
100.0
Sale of electronic devices
R&D
100.0
100.0
R&D
100.0
R&D
R&D
R&D
Medical equipments
Medical equipments
Medical equipments
100.0
100.0
100.0
100.0
100.0
100.0
Samsung Medison Europe (SMNL)
Medical equipments
100.0
Nanogen Recognomics (Nanogen)
Samsung Electronics Rus (SER)
Samsung Electronics Rus Company (SERC)
Samsung Electronics Ukraine (SEU)
Samsung Electronics Baltics (SEB)
Samsung Electronics Ukraine Company
(SEUC)
Samsung Moscow Research Centre (SMRC)
Samsung Electronics Kazakhstan (SEK)
Samsung Electronics KZ and Central Asia
(SEKZ)
Samsung Electronics Rus Kaluga (SERK)
Samsung Russia Service Center (SRSC)
Samsung Opto-Electronics GmbH (SOG)
Samsung Electronics Limited (SEL)
Samsung Telecoms (UK) (STUK)
Samsung Denmark Research Center
(SDRC)
Samsung France Research Center (SFRC)
Samsung Cambridge Solution Centre
(SCSC)
Samsung Electronics West Africa (SEWA)
Samsung Electronics East Africa (SEEA)
Samsung Gulf Electronics (SGE)
Samsung Electronics Egypt (SEEG)
Samsung Electronics Israel (SEIL)
Samsung Electronics Tunisia (SETN)
Samsung Electronics Pakistan (SEPAK)
Samsung Electronics South Africa (SSA)
Samsung Electronics Turkey (SETK)
Samsung Semiconductor Israel R&D Center
(SIRC)
Samsung Electronics Levant (SELV)
Samsung Electronics Morocco (SEMRC)
Medical equipments
Marketing
Sale of electronic devices
Marketing
Sale of electronic devices
Sale of electronic devices
60.0
100.0
100.0
100.0
100.0
100.0
R&D
Marketing
Sale of electronic devices
100.0
100.0
100.0
Manufacture of CTV
Services
Sale of electronic devices
Holding Company
Sale of electronic devices
R&D
100.0
100.0
100.0
100.0
100.0
100.0
R&D
R&D
100.0
100.0
Marketing
Marketing
Sale of electronic devices
Manufacture of CTV-Monitor
Marketing
Marketing
Marketing
Sale of electronic devices
Sale and Marketing of electronic devices
R&D
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Sale of electronic devices
Sale of electronic devices
100.0
100.0
15
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Area
China
Subsidiaries
Samsung Display Dongguan (SDDG)
Samsung Display Tianjin (SDTJ)
Samsung Electronics Hong Kong (SEHK)
Suzhou Samsung Electronics (SSEC)
Samsung Suzhou Electronics Export
(SSEC-E)
Samsung (China) Investment (SCIC)
Samsung Guangzhou Mobile R&D Center
(SGMC)
Samsung Tianjin Mobile R&D (STMC)
Samsung Electronics Suzhou Semiconductor
(SESS)
Samsung Electronics (Shandong) Digital
Printing (SSDP)
Samsung Electronics Huizhou (SEHZ)
Tianjin Samsung Electronics (TSEC)
Samsung Electronics Taiwan (SET)
Beijing Samsung Telecom R&D Center
(BST)
Tianjin Samsung Telecom Technology
(TSTC)
Shanghai Samsung Semiconductor (SSS)
Samsung Electronics Suzhou Computer
(SESC)
Samsung Display Suzhou (SDSZ)
Samsung Suzhou LCD (SSL)
Shenzhen Samsung Kejian Mobile
Telecommunication Technology (SSKMT)
Samsung Electronics Shanghai
Telecommunication (SSTC)
Samsung LCD Netherlands R&D Center
HK (SNRC (HK))
Samsung Semiconductor (China) R&D
(SSCR)
Samsung Electronics China R&D Center
(SCRC)
Samsung (China) Semiconductor (SCS)
Samsung Electronics Hainan Fiberoptics
(SEHF)
Samsung Electronics (Beijing) Service
(SBSC)
Medison (Shanghai) (SMS2)
Samsung Medison Shanghai Medical
Instrument (SMS1)
Medison Medical Equipment (Shanghai)
(MMS)
Tianjin Samsung LED (TSLED)
Tianjin Samsung Opto-Electronics (TSOE)
Industry
Manufacture of TFT-LCD
Manufacture of TFT-LCD
Sale of electronic devices
Manufacture of home appliances
Manufacture of home appliances
Percentage
of
ownership1
100.0
95.0
100.0
88.3
100.0
Sale of electronic devices
R&D
100.0
100.0
R&D
Toll processing of semiconductor
100.0
100.0
Manufacture of printer
100.0
Manufacture of electronic devices
Manufacture of electronic devices
Sale of electronic devices
R&D
99.8
91.3
100.0
100.0
Manufacture of communication devices
90.0
Sale of semiconductor and LCD
Manufacture of electronic devices
100.0
100.0
Toll processing of TFT-LCD
Manufacture of TFT-LCD
Manufacture of communication devices
100.0
60.0
60.0
Sale of mobile communication and network
equipment
R&D
100.0
100.0
R&D
100.0
R&D
100.0
Manufacture of electronic devices
Manufacture of optical fiber, cable
100.0
100.0
Services
100.0
Medical equipments
Medical equipments
100.0
98.2
Medical equipments
100.0
Manufacture of LED
Manufacture of camera and camcorder
100.0
90.0
16
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Area
Rest of Asia
Subsidiaries
Samsung Japan (SJC)
Samsung Yokohama Research Institute
(SYRI)
Samsung Electronics Japan (SEJ)
TNP Small/Medium Size & Venture
Enterprises Growth Promotion Investment
Limited Partnership (TSUNAMI)
Samsung Electronics Display (M) (SDMA)
Samsung Electronics (M) (SEMA)
Samsung Vina Electronics (SAVINA)
Samsung Asia Private (SAPL)
Samsung India Electronics (SIEL)
Samsung India Software Operations (SISO)
Samsung Electronics Australia (SEAU)
Samsung Electronics Indonesia (SEIN)
Samsung Telecommunications Indonesia
(STIN)
Thai Samsung Electronics (TSE)
Samsung Electronics Philippines (SEPCO)
Samsung Electronics Philippines
Manufacturing (SEPHIL)
Batino Realty Corporation (BRC) 2
Samsung Malaysia Electronics (SME)
Samsung Bangladesh R&D (SBRC)
Samsung Electronics Vietnam (SEV)
Samsung Telecommunications Malaysia
(STM)
Samsung Medison India (SMIN)
Medison Medical Systems (India) (MI)
Percentage
of
ownership1
100.0
100.0
Industry
Sale of electronic devices
R&D
Sale and services of communication equipments
Technology business investment
100.0
97.0
Manufacture and sales of electronic devices
Manufacture of home appliances
Manufacture and sales of electronic devices
Sale of electronic devices
Manufacture and sale of electronic devices
R&D
Sale of electronic devices
Manufacture and sale of electronic devices
Sale and services of communication equipments
100.0
100.0
80.0
100.0
100.0
100.0
100.0
100.0
99.0
Manufacture and sale of electronic devices
Sale of electronic devices
Manufacture of electronic devices
91.8
100.0
100.0
Management of real estate
Sale of electronic devices
R&D
Manufacture of electronic devices
Communication system service
39.8
100.0
100.0
100.0
100.0
Medical equipments
Medical equipments
100.0
100.0
1
Ownership represents the Company’s ownership of the voting right in each entity.
Although the Company owns less than 50% of the voting rights of BRC as at December 31, 2012, the Company is considered to
have control over BRC, as BRC is a special purpose entity, and its operations are based on the specific business needs of the
Company. Therefore the Company obtains most of the benefits from BRC’s operation.
2
(B) A summary of financial data of major consolidated subsidiaries is as follows:
(1) 2012
(In millions of Korean won)
Samsung Display (SDC)
Samsung Electronics America (SEA)
Samsung Austin Semiconductor (SAS)
Samsung Semiconductor (SSI)
Samsung (China) Investment (SCIC)
Samsung Telecommunications America (STA)
Samsung Electronics Europe Holdings (SEEH)
Samsung Electronics Vietnam (SEV)
Samsung Electronics Huizhou (SEHZ)
Samsung Electronica da Amazonia (SEDA)
Tianjin Samsung Telecom Technology (TSTC)
Samsung Electronics Taiwan (SET)
Assets
33,791,814
11,432,490
6,728,824
5,502,929
5,407,272
5,009,772
4,377,597
3,416,148
3,275,716
2,556,334
2,234,437
2,117,243
17
2012
Liabilities
9,122,941
6,598,643
3,819,196
2,136,789
4,519,921
4,516,706
3,068,900
1,498,575
1,496,513
1,564,590
1,227,917
1,885,749
Sales
22,304,545
12,430,205
3,063,343
17,325,969
13,796,191
15,308,222
14,599,505
15,343,968
6,145,530
10,697,834
4,967,564
Net income
2,079,916
201,790
(86,815)
20,797
264,269
109,896
7,856
854,250
700,435
198,552
551,682
38,298
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In millions of Korean won)
Shanghai Samsung Semiconductor (SSS)
Samsung Electronics Rus Company (SERC)
Samsung Electronics Slovakia (SESK)
Samsung Japan (SJC)
Samsung Semiconductor Europe GmbH (SSEG)
Samsung Electronics Europe Logistics (SELS)
Samsung India Electronics (SIEL)
Thai Samsung Electronics (TSE)
Samsung Electronics (UK) (SEUK)
Samsung Electronics Hungarian (SEH)
Samsung Electronics Rus Kaluga (SERK)
Samsung Electronics Hong Kong (SEHK)
Samsung Electronics Mexico (SEM)
Assets
1,998,989
1,705,108
1,696,474
1,570,232
1,569,684
1,529,851
1,449,983
1,447,777
1,349,828
1,301,842
1,296,147
1,294,473
1,291,398
2012
Liabilities
1,824,247
1,367,484
426,980
1,382,927
1,556,757
1,443,264
964,580
463,908
763,081
416,616
465,344
1,067,647
1,053,329
Sales
12,584,108
6,712,179
5,279,531
6,021,986
5,191,270
12,873,583
5,089,445
4,799,886
5,722,969
3,542,522
2,348,160
2,362,833
2,814,961
Net income
60,991
21,832
147,665
26,503
(32)
29,372
316,994
295,994
74,329
153,961
194,169
83,950
37,902
Assets
9,816,571
6,952,894
5,974,863
3,323,358
2,235,101
3,796,937
2,217,392
2,984,592
2,434,259
1,664,989
1,794,858
2,024,403
1,509,256
2,361,719
2,856,471
1,338,671
1,368,673
1,090,390
1,169,778
996,860
1,318,553
1,125,145
1,155,606
1,094,270
1,411,349
2011
Liabilities
4,913,504
3,731,834
2,490,812
2,652,717
1,818,412
3,592,183
1,043,133
1,816,087
1,482,344
907,083
1,582,616
1,901,188
1,189,211
1,174,527
2,197,847
1,325,034
1,285,617
876,886
443,187
457,017
592,167
470,867
998,115
925,327
1,018,670
Sales
10,873,623
2,521,060
16,762,084
9,117,657
10,059,797
6,810,279
8,380,968
5,448,043
7,022,353
5,394,509
10,919,636
5,725,681
4,893,947
7,840,230
5,198,900
10,759,828
4,177,987
3,543,691
3,808,041
4,322,195
2,177,423
1,522,892
2,444,660
6,092,471
Net income
(1,825)
19,796
47,593
124,892
46,184
5,227
905,239
398,015
(43,406)
327,649
18,497
48,248
33,313
255,032
36,929
483
12,118
62,550
189,320
49,564
191,329
291,158
23,104
5,125
156,469
(2) 2011
(In millions of Korean won)
Samsung Electronics America (SEA)
Samsung Austin Semiconductor (SAS)
Samsung Semiconductor (SSI)
Samsung (China) Investment (SCIC)
Samsung Telecommunications America (STA)
Samsung Electronics Europe Holdings (SEEH)
Samsung Electronics Vietnam (SEV)
Samsung Electronics Huizhou (SEHZ)
Samsung Electronica da Amazonia (SEDA)
Tianjin Samsung Telecom Technology (TSTC)
Samsung Electronics Taiwan (SET)
Shanghai Samsung Semiconductor (SSS)
Samsung Electronics Rus Company (SERC)
Samsung Electronics Slovakia (SESK)
Samsung Japan (SJC)
Samsung Semiconductor Europe GmbH (SSEG)
Samsung Electronics Europe Logistics (SELS)
Samsung India Electronics (SIEL)
Thai Samsung Electronics (TSE)
Samsung Electronics (UK) (SEUK)
Samsung Electronics Hungarian (SEH)
Samsung Electronics Rus Kaluga (SERK)
Samsung Electronics Hong Kong (SEHK)
Samsung Electronics Mexico (SEM)
Samsung Electronics Suzhou Computer (SESC)
(C) Changes in scope of consolidation
Domestic
America
Subsidiaries
Samsung Display (SDC)
Samsung Venture Capital Union #23
mSpot
Nanoradio
Samsung LED America (SLA)
Samsung Electronics Panama (SEPA)
Samsung Electronics Corporativo (SEC)
Samsung Electronics Digital appliance (SEDAM)
18
Description
Spin-off
Acquisition of shares
Acquisition of shares
Acquisition of shares
Acquisition of shares
Incorporation
Acquisition of shares
Acquisition of shares
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
America
(Cont.)
Europe
Middle East and
Africa
China
Subsidiaries
Nvelo
Newton Sub
Samsung Nanoradio Design Center (SNDC)
Nanoradio Hellas
General RF Modules
Samsung LED Europe GmbH (SLEG)
Samsung Cambridge Solution Centre (SCSC)
Samsung Denmark Research Center (SDRC)
Samsung France Research Center (SFRC)
Samsung Electronics Egypt (SEEG)
Samsung Electronics Tunisia (SETN)
Samsung Electronics Israel (SEIL)
Samsung Electronics Pakistan (SEPAK)
Tianjin Samsung LED (TSLED)
Samsung (China) Semiconductor (SCS)
Description
Acquisition of shares
Incorporation
Acquisition of shares
Acquisition of shares
Acquisition of shares
Acquisition of shares
Incorporation
Incorporation
Acquisition of shares
Incorporation
Incorporation
Incorporation
Incorporation
Acquisition of shares
Incorporation
(D) Details of subsidiaries deconsolidated for the year ended December 31, 2012, are as follows:
Area
Domestic
America
Europe
Asia
Subsidiaries
Medison Healthcare
Prosonic
Samsung Mobile Display
SLCD
Samsung Venture Capital Union #7
SEHF Korea
Samsung LED America(SLA)
HX Diagnostics(HX)
HX Reagents(HX Reagent)
Nanoradio
Samsung LED Europe GmbH(SLEG)
Samsung Asia Private(SAPL)1
Samsung Medison Japan(SMJP)
Description
Merger
Merger
Merger
Merger
Liquidation
Merger
Liquidation
Liquidation
Liquidation
Liquidation
Merger
Merger
Liquidation
1
Samsung Asia Private merged with Samsung Electronics Asia Holding, and the resulting subsidiary is named Samsung Asia
Private (Note 37).
2. Summary of Significant Accounting Policies
2.1 Basis of Presentation
The Company first adopted International Financial Reporting Standards as adopted by the Republic of Korea
("Korean IFRS") from January 1, 2010. International Financial Reporting Standards (IFRS) have been adopted by the
Korean Accounting Standards Board as Korean IFRS based on standards and interpretations published by the
International Accounting Standards Board.
The Company has prepared the consolidated financial statements in accordance with Korean IFRS (“K-IFRS”). KIFRS permits the use of critical accounting estimates in the preparation of the financial statements and requires
management judgments in applying accounting policies. Footnote 3 explains where more complex and higher
standards of judgment or critical assumptions and estimates are required.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated. Changes in
accounting policies applied in the current fiscal year are presented in footnote 2.2.
19
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.2 Changes in Accounting Standards
(A) Amendments Adopted
K-IFRS 1001, ‘Presentation of financial statements’
The amendment requires entities to present operating income after deducting cost of sales, selling, and general and
administrative expenses from revenue. The amendment has been retroactively applied in the preparation of the
consolidated statement of income. Dividend income, profit on business transfer, gains and losses on disposal of
property, plant and equipment, donations, and impairment losses on intangible assets which were previously classified
as operating income are now excluded from operating income. As a result, operating income has increased by
￦23,036 million for the current financial year and decreased by ￦638,329 million for the prior financial years,
relative to the figures under the standard prior to the amendment. The amendment does not have an impact on net
income or earnings per share in the current or prior financial years.
(B) Standards Early Adopted
New standards issued and effective for the financial year beginning January 1, 2013 and early adopted are set out
below:
K-IFRS 1019, ‘Employee benefits’
The main impacts on the Company will be that the corridor approach will no longer be applied and instead all
actuarial gains and losses will be recognized in other comprehensive income as they occur; all past service costs will
be immediately recognized, and expected return on plan assets will be replaced with a net interest amount calculated
by applying the discount rate to the net defined benefit liability. The impacts of the amendment on the financial
statements are as follows:
(1) Impacts on Financial Position
December 31, 2011
(In millions of Korean won)
Pre-amendment
Deferred income tax assets
January 1, 2011
Post-amendment
Pre-amendment
Post-amendment
1,614,077
1,783,086
1,124,009
1,144,068
418,486
1,119,188
597,829
823,486
2,333,442
2,333,442
1,652,667
1,618,523
Other components of equity
(5,244,167)
(5,833,896)
(4,726,398)
(4,931,290)
Retained earnings
97,542,525
97,622,872
85,014,550
85,071,444
4,245,558
4,223,247
3,759,532
3,736,075
Defined benefit liability
Deferred income tax liability
Non-controlling interests
(2) Impacts on Business Performance
2011
Pre-amendment
(In millions of Korean won)
Post-amendment
Operating income1
15,611,388
15,644,291
Income tax expense
3,424,948
3,432,875
13,734,067
13,759,043
374,875
376,398
Basic earnings per share (in Korean won)
89,073
89,229
Diluted earnings per share (in Korean won)
88,990
89,146
(502,271)
(887,485)
Net income
Net income attributable to non-controlling interests
Other comprehensive income
1
Operating income is calculated by retroactively applying the changes in the calculation method of operating income and expenses.
20
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
K-IFRS 1001, ‘Presentation of financial statements’
The amendment requires entities to group items presented in other comprehensive income based on whether they are
potentially reclassifiable to profit or loss subsequently. The Company early adopted and applied the amendment
retroactively in the preparation of the financial statements.
(C) Standards Not Effective or Early Adopted
New standards, amendments and interpretations issued but not effective for the financial year beginning January 1,
2012 and not early adopted are set out below:
K-IFRS 1113, ‘Fair value measurement’
The standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a
single source of fair value measurement and disclosure requirements for use across Financial Reporting Standards.
The requirements, which are largely aligned between IFRS and US GAAP, do not extend the use of fair value
accounting but provide guidance on how it should be applied where its use is already required or permitted by other
standards within IFRS or US GAAP. The Company is still in the process of assessing the impact of the amendment on
the consolidated financial statements and intends to adopt K-IFRS 1113 no later than the accounting period beginning
January 1, 2013.
K-IFRS 1110, ‘Consolidated financial statements’
The standard explains the principle of control which is the basis for determining which entities are consolidated in the
consolidated financial statements. An investor controls an investee when it is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability to affect those returns through its power over the
investee. The standard sets out further guidance where it is difficult to determine control. The standard will be
effective for the fiscal year beginning January 1, 2013. The Company is in the process of assessing the impact of the
standard on the consolidated financial statements
K-IFRS 1111, ‘Joint arrangements Introduction’
The standard reflects the essence of joint arrangements and focuses on the rights and obligations of the parties to the
joint arrangements rather than on the legal forms of the arrangements. The standard classifies joint arrangements into
joint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control
of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the liabilities, relating to the
arrangement. A joint operator accounts for the assets, liabilities, revenues and expenses in relation to its interest in the
arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e.
joint venturers) have rights to the net assets of the arrangement. Joint venturers account for the investment using the
equity method. The standard will be effective for the fiscal year beginning January 1, 2013. The Company is in the
process of assessing the impact of the standard on the consolidated financial statements.
K-IFRS 1112, ‘Disclosure of interests in other entities’
The standard provides disclosure requirements for all types of equity investments in other entities including
subsidiaries, joint arrangements, associates, consolidated structured entities and unconsolidated structured entities.
The standard will be effective for the fiscal year beginning January 1, 2013. The Company is in the process of
assessing the impact of the standard on the consolidated financial statements.
21
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.3 Consolidation
The Company prepares annual consolidated financial statements in accordance with K-IFRS 1027, Consolidated and
Separate Financial Statements.
(A) Subsidiaries
The consolidated financial statements include the accounts of SEC and its controlled subsidiaries. Control over a
subsidiary is presumed to exist when the Company has the power to govern the financial and operating policies of an
entity to obtain benefits from its activities generally accompanying a shareholding of more than one half of the voting
rights. The existence and effects of potential voting rights that are exercisable or convertible at the end of the reporting
period are considered in determining whether the Company controls another entity. Moreover, K-IFRS 1027 requires
the evaluation of whether the Company holds control over the financial and operating policies of a subsidiary where
the Company’s shareholding is less than or equal to 50%. Control is presumed to exist when the Company is
considered to have control over the financial and operating policies of a subsidiary through its ownership relative to
those of other shareholders. Subsidiaries are fully consolidated from the date when control is transferred to the
Company and de-consolidated from the date which control ceases to exist.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Company. The cost of
an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any
non-controlling interest. The excess of the cost of acquisition over the fair value of the Company’s share of the
identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net
assets of the subsidiary acquired, the difference is recognized directly in the statement of income. For each business
combination, the Company measures any non-controlling interest in the acquiree at the non-controlling interest’s
proportionate share of the acquiree’s identifiable net assets.
In a business combination achieved in stages, the acquisition date fair value of the acquirer’s previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
The Company recognizes the acquisition-date fair value of contingent consideration. Changes in the fair value of
contingent consideration classified as an asset or a liability are recognized in profit or loss in accordance with K-IFRS
1039, ‘Financial Instruments: Recognition and Measurement’. Contingent consideration classified as equity shall not
be remeasured and its subsequent settlement shall be accounted for within equity.
The Company recognizes goodwill as of the acquisition date measured as the excess of (1) the aggregate of 1) the
consideration transferred, 2) the amount of any non-controlling interest in the acquiree and 3) the acquisition-date fair
value of the Company’s previously held equity interest in the acquiree over (2) the net identifiable assets acquired. If
the aggregate amount in (1) is less than the fair value of the acquiree’s net assets (2), the difference is recognized in
profit or loss.
Inter-company transactions, balances, income, expenses and unrealized gains on inter-company transactions are
eliminated. Unrealized losses are eliminated upon assessing the impairment of the transferred assets. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the
Company.
22
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(B) Changes in the ownership of a subsidiary without gain or loss of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity.
transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of
any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded
in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
(C) Disposal of a subsidiary
When the Company ceases to have control, any retained interest in the entity is re-measured to its fair value at the date
when control is lost, with the change in carrying amount recognized in profit or loss. The fair value is the initial
carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or
financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that
entity are accounted for as if the Company had directly disposed of the related assets or liabilities. This may mean that
amounts previously recognized in other comprehensive income are reclassified to profit or loss.
(D) Non-controlling interests
Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the
non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the noncontrolling interests even if this results in the non-controlling interests having a deficit balance. Any changes in a
parent's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions (i.e. transactions among owners in their capacity as owners).
(E) Associated companies
Investments in companies in which the Company does not have the ability to directly or indirectly control the
financial and operating decisions, but does possess the ability to exercise significant influence, are accounted for using
the equity method. Generally, it is presumed that if at least 20% of the voting stock and potential voting rights is
owned, significant influence exists. The Company’s investment in associates includes goodwill identified upon
acquisition, net of any accumulated impairment loss.
If the ownership in associated companies decreases to the extent that the Company loses significant influence, the
Company will reclassify the proportionate amount previously recognized in other comprehensive income to profit or
loss.
The Company’s share of post-acquisition profit or loss is recognized in the income statement, and its share of post
acquisition movements in other comprehensive income is recognized in other comprehensive income with a
corresponding adjustment to the carrying amount of the investment. When the Company’s share of losses in an
associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does
not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate or joint
venture.
The Company assesses at the end of each reporting period whether there is any objective evidence that the
investments in associates are impaired. If any such evidence exists, the Company will recognize impairment loss as
the difference between the recoverable amount and the carrying amount of investments in associates. The impairment
loss will be separately disclosed in the statement of income as an impairment loss on associates.
23
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the parent
company’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of
an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to
ensure consistency with the policies adopted by the Company. Decrease in the interest in associates is recognized in
profit or loss where the Company maintains significant influence over associates although its share has been
decreased.
(F) Joint ventures
Joint ventures are entities in which the Company holds joint control with other participants based on an agreed upon
contract. Investments in joint ventures are initially recognized at cost and then accounted for using the equity method.
The Company’s investment in joint ventures includes goodwill identified upon acquisition, net of any accumulated
impairment loss. If the Company purchases assets from joint ventures, the Company does not recognize its share of
post-acquisition profit until it disposes of the acquired assets to a third party. The Company recognizes losses from
these transactions where such losses provide evidence of an impairment of the assets or decrease of net realizable
value.
2.4 Foreign Currency Translation
(A) Functional and presentation currency
Items included in the financial statements of each of the Company’s entities are measured using the currency of the
primary economic environment in which each entity operates (‘the functional currency’). The consolidated financial
statements are presented in Korean won, which is SEC’s functional and presentation currency.
(B) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at the exchange rate at the end of the reporting period of
monetary assets denominated in foreign currencies are recognized as realized foreign exchange gains and losses under
finance income and expense in the statement of income, except when deferred in other comprehensive income as
qualifying cash flow hedges and qualifying net investment hedges.
Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale
financial assets are analyzed between translation differences resulting from changes in the amortized cost of the
security and other changes in the carrying amount of the security. Translation differences related to changes in
amortized cost are recognized in profit or loss, and other changes in carrying amount are recognized in other
comprehensive income.
Translation differences on non-monetary financial assets and liabilities are recognized in profit or loss as part of the
fair value gain or loss. Translation differences on non-monetary financial assets such as equity instruments held at fair
value through profit or loss are recognized in profit or loss as part of the fair value gain or loss. Translation differences
on non-monetary financial assets, such as equities classified as available-for-sales are included in other
comprehensive income.
24
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(C) Translation into presentation currency
The results and financial position of all the foreign entities that have a functional currency different from the
presentation currency of the Company are translated into the presentation currency as follows:
Assets and liabilities are translated at the closing rate at the end of the reporting date.
Income and expenses for each statement of income are translated at average exchange rates, unless this average is not
a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case
income and expenses are translated at the rate on the dates of the transactions; and all resulting exchange differences
are recognized in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are
recognized in other comprehensive income. When a foreign operation is partially disposed of or sold, the exchange
differences that were recorded in equity are reclassified as part of gains and losses on disposition in the statement of
income. When the Company loses control over foreign subsidiaries, the exchange differences that were recorded in
equity are reclassified in the statement of income during the period when the gain or loss is recognized in profit or loss.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments are treated as the foreign
operation’s assets and liabilities. The goodwill is expressed in the foreign operation’s functional currency and is
translated at the closing rate. Exchange differences should be recognized in other comprehensive income.
2.5 Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change
in value.
2.6 Financial Assets
(A) Classification
The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and
receivables, available-for-sale, and held-to-maturity investments. The classification depends on the terms of the
instruments and purpose for which the financial assets were acquired. Management determines the classification of its
financial assets at initial recognition.
(1) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in
this category if acquired principally for the purpose of selling in the short-term. Derivatives not subject to hedge
accounting and derivatives separated from financial instruments such as embedded derivatives are also categorised as
held for trading. Assets in this category are classified as current assets.
(2) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. They are included in current assets, except for those with maturities greater than 12 months after the
end of the reporting period which are classified as non-current assets.
25
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(3) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in
any of the other categories. They are included in non-current assets unless an investment matures or management
intends to dispose of it within 12 months of the end of the reporting period.
(B) Recognition and measurement
Regular purchases and sales of financial assets are recognized on the trade date. Investments are initially recognized at
fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets
carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in
the statement of income. Available-for-sale financial assets and financial assets at fair value through profit or loss are
subsequently carried at fair value. Loans and receivables and held-to-maturity investments are subsequently carried at
amortized cost using the effective interest method.
Gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss,
including interest income, are presented as financial income in the statement of income in the period in which they
arise. Dividend income from financial assets at fair value through profit or loss is recognized as other non-operating
income in the statement of income when the Company’s right to receive payments is established.
Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognized in
other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated
fair value adjustments previously recognized in equity are transferred to the statement of income under other nonoperating income or other expense items.
Interest on available-for-sale financial assets and held-to-maturity financial assets calculated using the effective
interest method is recognized in the statement of income as part of finance income. Dividends on available-for-sale
financial assets are recognized in the statement of income as part of other non-operating income when the Company’s
right to receive payments is established.
(C) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there
is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or
realize the asset and settle the liability simultaneously.
(D) Derecognition of financial assets
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, when
the Company transfers the contractual rights to receive the cash flows of the financial asset and substantially all the
risks and rewards of ownership, or when the Company neither transfers nor retains substantially all the risks and
rewards of ownership of the financial asset and has not retained control of the financial asset.
Financial liabilities that arise through a transfer of receivables in factoring arrangements with recourse do not qualify
for derecognition since the Company retains substantially all the risks and rewards associated with the receivables..
Such liabilities are classified as short-term borrowings in the consolidated statement of financial position.
26
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.7 Impairment of Financial Assets
(A) Assets carried at amortized cost
The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment loss is
recognized only if there is objective evidence of impairment as a result of one or more events that occurred after the
initial recognition of the asset or group of financial assets (a ‘loss event’) and that loss event (or events) has an impact
on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The following represent some of the factors that could lead the Company to assess that there is objective evidence
that a financial asset or group of assets is impaired:
-
significant financial difficulty of the issuer or obligor;
delinquency in interest or principal payments;
the lender, for economic or legal reasons relating to the borrower's financial difficulty, grants to the borrower a
concession that the lender would not otherwise consider;
it becoming probable that the borrower will enter bankruptcy or other financial reorganisation;
the disappearance of an active market for that financial asset because of financial difficulties; or
observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of
financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the
individual financial assets in the group, including:
1) adverse changes in the payment status of borrowers in the group; or
2) national or local economic conditions that correlate with defaults on the assets in the group.
The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial
asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is
recognized in the consolidated statement of income. In cases of floating rate financial assets, the amount of the loss
will be computed using the present effective interest rate determined by the contract. As a practical expedient, the
Company may measure impairment on the basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to
an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the
reversal of the previously recognized impairment loss is recognized in the consolidated statement of income.
(B) Financial Instruments Classified as Available-for-sale
The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or
a group of financial assets is impaired. Debt instruments are accounted for using the provisions described in (1). In the
case of equity investments classified as available-for-sale, a 20% or greater decline in the fair value of the security
below its cost or a continuous decline for more than 6 months is also evidence of impairment. If any such evidence
exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss –
is removed from equity and recognized in the consolidated statement of income. Impairment losses on equity
instruments recognized in the consolidated statement of income are not reversed through the consolidated statement of
income. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the
increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the
impairment loss is reversed through the consolidated statement of income.
27
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.8 Trade Receivables
Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary course
of business. If collection is expected in one year or less (or in the normal operating cycle of the Company if longer),
they are classified as current assets. If not, they are presented as non-current assets. Trade receivables are recognized
initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision
for impairment.
2.9 Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the average cost method,
except for materials-in-transit. The cost of finished goods and work in progress comprises design costs, raw materials,
direct labor, other direct costs and related production overheads (based on normal operating capacity). It excludes
costs of idle plant and abnormal waste. Net realizable value is the estimated selling price in the ordinary course of
business, less applicable variable selling expenses.
Inventories are reduced for the estimated losses arising from excess, obsolescence, and decline in value. This
reduction is determined by estimating market value based on future customer demand. The losses on inventory
obsolescence are recorded as a part of cost of sales.
2.10 Disposal Groups Classified as Held for Sale
When the carrying amount of certain assets and liabilities are expected to be recovered through sale and the sale of a
disposable group is highly probable, such assets and liabilities are classified as held for sale and measured at the lower
of their carrying amount and fair value.
2.11 Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Historical cost includes expenditures that are directly attributable to the acquisition of the items. Subsequent costs are
included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Company and the cost of the item can be measured
reliably. The carrying amount of those parts that are replaced is derecognized and repairs and maintenance expenses
are recognized in profit or loss in the period they are incurred.
Depreciation on tangible assets is calculated using the straight-line method to allocate their cost to their residual
values over their estimated useful lives. Land is not depreciated. Costs that are directly attributable to the acquisition,
construction or production of a qualifying asset, including capitalized interest costs, form part of the cost of that asset
and are amortized over the estimated useful lives.
The Company policy is that assets should be depreciated over the following estimated useful lives:
Estimated useful lives
15, 30 years
15 years
5 years
5 years
5 years
Buildings and auxiliary facilities
Structures
Machinery and equipment
Tools and fixtures
Vehicles
28
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Tangible assets’ depreciation methods, residual values and useful lives are reviewed, and adjusted if appropriate, at
the end of each reporting period. An asset’s carrying amount is written down immediately to its recoverable amount if
the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are
determined by comparing the proceeds with the carrying amount and are recognized within the statement of income as
part of other non-operating income and expenses.
2.12 Intangible Assets
(A) Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net
identifiable assets of the acquired subsidiary, associates, joint ventures and businesses at the date of acquisition.
Goodwill on acquisitions of subsidiaries and businesses is included in intangible assets and goodwill on acquisition of
associates and joint ventures are included in the investments in associates and joint ventures. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold.
For the purpose of impairment testing, goodwill acquired in a business combination shall, from the acquisition date,
be allocated to each of the acquirer’s cash-generating units, or groups of cash-generating units, that is expected to
benefit from the synergies of the combination, and the allocation shall be determined based on the operating segments.
Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Goodwill is tested
for impairment annually or more frequently if there is any indication that it may be impaired. Goodwill is tested for
impairment by comparing the carrying amount of the cash-generating units or groups of cash-generating units with the
recoverable amount, which is the higher of its fair value less costs to sell and its value in use. An impairment loss is
immediately recognized and is not subsequently reversed.
(B) Capitalized development costs
The Company capitalizes certain development costs when the outcome of a development plan is for practical
enhancement, probability of technical and commercial achievement for the development plans are high, and the
necessary cost is reliably estimable. Capitalized costs, comprising direct labor and related overheads, are amortized on
a straight-line basis over their useful lives. In presentation, accumulated amortization and accumulated impairment
amounts are deducted from capitalized costs associated with development activities.
(C) Other intangible assets
Certain membership dues are regarded as having an indefinite useful life because there is no foreseeable limit to the
period over which the asset is expected to generate net cash inflows for the entity, and such assets are not amortized.
Trademarks and licenses which are separately acquired are presented at historical cost. Trademarks and licenses which
are acquired in business combinations are recorded at the fair value at the acquisition date. They have definite useful
lives and are measured at cost less any accumulated amortization and amortized on a straight-line basis over their 5 or
10 year estimated useful lives.
The contractual customer relationships were acquired in a business combination and are recognized at fair value at the
acquisition date. The contractual relationships have a definite useful life and are recorded at cost less any accumulated
amortization and amortized on a straight-line basis over the estimated period of the customer relationship.
Software is capitalized and amortized using the straight-line method over their useful lives, generally 5 to 10 years.
Where an indication of impairment exists, the carrying amount of an intangible asset is assessed and written down to
its recoverable amount.
29
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.13 Impairment of Non-Financial Assets
Intangible assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are
tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cashgenerating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal
of the impairment at each reporting date.
2.14 Financial Liabilities
(A) Financial liabilities at fair value through profit or loss
Financial liabilities are acquired or incurred principally for the purpose of selling or repurchasing in the near term.
Financial liabilities at fair value through profit or loss of the Company consist of derivatives which are not subject to
hedge accounting and derivatives separated from financial instruments such as embedded derivatives.
(B) Financial liabilities measured at amortized cost
Unless financial liabilities arise when transfer of financial assets or financial liabilities at fair value through profit or
loss do not qualify for derecognition, all non-derivative financial liabilities are classified as financial liabilities
measured at amortized cost. If a transfer does not result in derecognition, the Company continues to recognize the
transferred asset and a financial liability for the consideration received. Financial liabilities measured at amortized
cost, due within twelve months after the balance sheet date, are classified as current liabilities, otherwise, they are
classified as non-current liabilities.
2.15 Trade Payables
Trade payables are amounts due to suppliers for merchandise purchased or services received in the ordinary course of
business. If payment is expected in one year or less (or in the normal operating cycle of the Company if longer), they
are classified as current liabilities. If not, they are presented as non-current liabilities. Non-current trade payables are
recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
2.16 Borrowings
Borrowings are recognized initially at fair value, net of transaction costs and are subsequently measured at amortized
cost. Any difference between cost and the redemption value is recognized in the statement of income over the period
of the borrowings using the effective interest method. If the Company has an indefinite right to defer payment for a
period longer than 12 months after the end of the reporting date, such liabilities are recorded as non-current liabilities,
otherwise, they are recorded as current liabilities.
2.17 Provisions
A provision is recognized when the Company has a present legal or constructive obligation as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation. Provisions are not recognized for future operating
losses.
30
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to the passage of time is recognized as interest expense.
When it is probable that an outflow of economic benefits will occur due to a present obligation resulting from a past
event, and the amount is reasonably estimable, a corresponding provision is recognized in the financial statements.
However, when such outflow is dependent upon a future event, that is not certain to occur, or cannot be reliably
estimated, a disclosure regarding the contingent liability is made in the notes to the financial statements.
2.18 Defined Benefit Liabilities
The Company has a variety of retirement pension plans including defined benefit or defined contribution plans. A
defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity.
The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient
assets to pay all employees the benefits relating to employee service in the current and prior periods. For defined
contribution plans, the Company pays contributions to annuity plans that are managed either publicly or privately on a
mandatory, contractual or voluntary basis. The Company has no further future payment obligations once the
contributions have been paid. The contributions are recognized as employee benefit expense when they are due.
Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments
is available.
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define
an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors
such as age, years of service and compensation. The liabilities recognized in the statement financial position in respect
of defined benefit pension plans are the present values of the defined benefit obligations at the end of the reporting
period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries
using the projected unit credit method. The present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are
denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the
terms of the related pension liability.
Actuarial gains and losses resulting from the changes in actuarial assumptions, and the differences between the
previous actuarial assumptions and what has actually occurred, are recognized in other comprehensive income in the
period in which it was incurred. Past service costs are immediately recognized in profit and loss.
2.19 Financial Guarantee Contract
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payments when due. Financial guarantees are initially
recognized in the financial statements at fair value on the date the guarantee was given. If the amount measured in
subsequent periods exceeds the unamortized balance of the amount initially recognized, the excess is classified as
another financial liability.
31
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.20 Income Tax Expense and Deferred Taxes
The tax expense for the period comprises current and deferred tax. Tax is recognized in the statement of income,
except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case
the tax is also recognized in other comprehensive income or directly in equity as appropriate.
Deferred income tax is recognized on temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the consolidated financial statements; it is the future tax consequences of the future recovery
or settlement of the carrying amount. However, the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that
have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets are
recognized only to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilized.
An entity shall recognize a deferred tax liability for all taxable temporary differences associated with investments in
subsidiaries, associates, and interests in joint ventures, except to the extent that the parent company is able to control
the timing of the reversal of the temporary difference, and it is probable that the temporary difference will not reverse
in the foreseeable future. An entity shall recognize a deferred tax asset for all deductible temporary differences arising
from investments in subsidiaries and associates, and interests in joint ventures, to the extent that the temporary
difference will reverse in the foreseeable future and taxable profits will be available against which the temporary
difference can be utilized.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by
the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle
the balances on a net basis.
2.21 Derivative Instruments
All derivative instruments are accounted for at fair value with the resulting valuation gain or loss recorded as an asset
or liability. If the derivative instrument is not designated as a hedging instrument, the gain or loss is recognized in the
statement of income in the period of change.
Fair value hedge accounting is applied to a derivative instrument with the purpose of hedging the exposure to changes
in the fair value of an asset or a liability or a firm commitment (hedged item) that is attributable to a particular risk.
Hedge accounting is applied when the derivative instrument is designated as a hedging instrument and the hedge
accounting criteria have been met. The gain or loss, both on the hedging derivative instrument and on the hedged item
attributable to the hedged risk, is reflected in the statement of income.
2.22 Dividend Distribution
Dividend distribution to SEC’s shareholders is recognized as a liability in the Company’s financial statements in the
period in which the dividends are approved.
2.23 Share Capital and Premium
Common shares and preferred shares with no repayment obligations are classified as equity. When the Company
purchases its common shares, the acquisition costs including direct transaction costs are deducted from equity until
the redemption or reissuance of treasury shares. Consideration received on the subsequent sale or issue of treasury
shares is credited to equity.
32
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.24 Revenue Recognition
Revenue mainly comprises the fair value of the consideration received or receivable for the sale of goods in the
ordinary course of the Company’s activities. Revenue is shown net of value-added tax, returns, sales incentives and
discounts and after eliminating intercompany transactions.
The Company recognizes revenue when specific recognition criteria have been met for each of the Company’s
activities as described below. The Company bases its estimates on historical results, taking into consideration the type
of customer, the type of transaction and the specifics of each arrangement.
Where multiple-element arrangements exist, the fair values of each element are determined based on the current
market price of each of the elements when sold separately. When the fair values of each element are indeterminable,
the fair values of deliverables which have already been provided are calculated in such way that the fair values of
elements, which are yet to be provided, are subtracted from total contract value of the arrangement.
(A) Sales of goods
Sales of products and merchandise are recognized upon delivery when the significant risks and rewards of ownership
of goods have transferred to the buyer, continuing managerial involvement usually associated with ownership and
effective control have ceased, the amount of revenue can be measured reliably, it is probable that the economic
benefits associated with the transaction will flow to the Company and the costs incurred or to be incurred in respect of
the transaction can be measured reliably. The Company records reductions to revenue for special pricing
arrangements, price protection and other volume based discounts. If product sales are subject to customer acceptance,
revenue is not recognized until customer acceptance occurs.
(B) Sales of services
Revenues from rendering services are generally recognized using the percentage-of-completion method, based on the
percentage of costs to date compared to the total estimated costs, contractual milestones or performance.
(C) Other sources of revenue
Interest income is recognized using the effective interest method. When a loan and receivable is impaired, the
Company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at
the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Royalty
income is recognized on an accruals basis in accordance with the substance of the relevant agreements. Dividend
income is recognized when the right to receive payment is established.
2.25 Government Grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will
be received and the Company will comply with the conditions attached. Government grants relating to income are
deferred and recognized in the statement of income over the period necessary to match them with the income that they
are intended to compensate. Government grants relating to property, plant and equipment are included in non-current
liabilities as deferred government grants and are credited to the statement of income on a straight-line basis over the
expected lives of the related assets.
33
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.26 Earnings per Share
Basic earnings per share is calculated by dividing net profit for the period available to common shareholders by the
weighted-average number of common shares outstanding during the year. Diluted earnings per share is calculated
using the weighted-average number of common shares outstanding adjusted to include the potentially dilutive effect
of common equivalent shares outstanding.
2.27 Operating Segments
Operating segments are disclosed in the manner reported to the chief operating decision-maker (please see footnote
33). The chief operating decision-maker is responsible for making strategic decisions on resource allocation and
performance assessment of the operating segments. The management committee which makes strategic decisions is
regarded as the chief operating decision-maker.
2.28 Convenience Translation into United States Dollar Amounts
The Company operates primarily in Korean won and its official accounting records are maintained in Korean won.
The U.S. dollar amounts provided in the financial statements represent supplementary information solely for the
convenience of the reader. All Won amounts are expressed in U.S. dollars at the rate of ￦1,171.10 to US $1, the
exchange rate in effect on December 31, 2012. Such presentation is not in accordance with generally accepted
accounting principles, and should not be construed as a representation that the Won amounts shown could be readily
converted, realized or settled in U.S. dollars at this or at any other rate.
2.29 Approval of Financial Statements
These consolidated financial statements were approved by the Board of Directors on January 25, 2013.
3. Critical Estimates and Judgments
The Company makes estimates and assumptions concerning the future. The estimates and assumptions are
continuously assessed, considering historical experience and other factors, including expectations of future events that
are believed to be reasonable under the circumstances. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
(A) Revenue recognition
The Company uses the percentage-of-completion method in accounting for its fixed-price contracts to deliver
installation services. Use of the percentage-of-completion method requires the Company to estimate the services
performed to date as a proportion of the total services to be performed. Revenues and earnings are subject to
significant change, effected by early steps in a long-term projects, change in scope of a project, cost, period, and plans
of the customers.
(B) Provision for warranty
The Company recognizes provision for warranty on products sold. The Company accrues provision for warranty
based on the best estimate of amounts necessary to settle future and existing claims. The amounts are estimated based
on historical data.
34
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(C) Fair value of derivatives and other financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using a variety of
methods and assumptions that are mainly based on market conditions existing at the end of each reporting period.
(D) Pension benefits
The pension obligations depend on a number of factors that are determined on an actuarial basis using a number of
assumptions. Any changes in these assumptions will impact the carrying amount of pension obligations. The
Company, in consideration of the interest rates of high-quality corporate bonds, determines the appropriate discount
rate at the end of each year. This is the interest rate that is used to determine the present value of estimated future cash
outflows expected to be required to settle the pension obligations.
The principal actuarial assumptions associated with the defined benefit liability are based on the current market
expectations.
(E) Estimated impairment of goodwill
The Company tests at the end of each reporting period whether goodwill has suffered any impairment in accordance
with the accounting policy described in Note 2.12. The recoverable amounts of cash generating units have been
determined based on value-in-use calculations. These calculations are based on estimates.
(F) Income taxes
The operating activities of SEC span across various countries in the world; likewise, income taxes on the taxable
income from operating activities are subject to various tax laws and determinations of each tax authority. There is
uncertainty in determining the eventual tax effects on the taxable income from operating activities. The Company has
recognized current tax and deferred tax at the end of the fiscal year based on the best estimation of future taxes
payable as a result of operating activities. However, the resulting deferred income tax assets and liabilities may not
equal the actual future taxes payable and such difference may impact on the current tax and deferred income tax assets
and liabilities upon the determination of eventual tax effects.
4. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, and other short-term highly liquid
investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change
in value.
Cash and cash equivalents as of December 31, 2012 and 2011, consist of the following:
(In millions of Korean won)
2012
Cash on hand
Bank deposits, etc.
￦
Total
￦
35
2011
12,900
18,778,560
18,791,460
￦
￦
16,042
14,675,719
14,691,761
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5. Financial Assets Subject to Withdrawal Restrictions
Financial instruments subject to withdrawal restrictions as of December 31, 2012 and 2011, consist of the following:
(In millions of Korean won)
2012
2011
￦
Short-term financial instruments
Other non-current assets
- Long-term financial instruments
￦
46,489
39,770
29
21
6. Financial Instruments by Category
(A) Financial instruments by category consist of the following:
(1) As of December 31, 2012
(In millions of Korean won)
Assets
Cash and cash equivalents
Short-term financial instruments
Short-term available-for-sale financial
assets
Trade and other receivables
Long-term available-for-sale financial
assets
Deposits
Others
Total
(In millions of Korean won)
Liabilities
Trade and other payables
Short-term borrowings
Debentures
Long-term borrowings
Long-term other payables
Others
Total
Assets at fair
value through
the profit and
loss
￦
￦
Loans
and receivables
-
￦ 18,791,460
17,397,937
-
-
￦ 18,791,460
17,397,937
1,258,874
26,674,596
-
5,229,175
26,674,596
5,229,175
47,227
814,693
2,056,988
-
814,693
2,104,215
47,227
￦ 65,735,674
￦ 6,488,049
￦ 72,270,950
￦
Financial
liabilities
measured at
amortized cost
￦
Total
1,258,874
Liabilities at
fair value
through the
profit and loss
￦
Available-forsale financial
assets
Other
financial
liabilities
Total
79,212
￦ 16,889,350
4,115,249
1,829,374
3,623,028
1,165,881
10,788,823
￦
4,328,503
-
￦ 16,889,350
8,443,752
1,829,374
3,623,028
1,165,881
10,868,035
79,212
￦ 38,411,705
￦ 4,328,503
￦ 42,819,420
36
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(2) As of December 31, 2011
(In millions of Korean won)
Assets
Cash and cash equivalents
Short-term financial instruments
Short-term available-for-sale financial
assets
Trade and other receivables
Long-term available-for-sale financial
assets
Deposits
Others
Total
(In millions of Korean won)
Liabilities
Trade and other payables
Short-term borrowings
Debentures
Long-term borrowings
Long-term other payables
Others
Total
Assets at fair
value through
the profit and
loss
￦
Loans
and receivables
￦ 14,691,761
11,529,905
-
-
￦ 14,691,761
11,529,905
655,969
24,153,028
-
3,223,598
24,153,028
3,223,598
130,057
791,863
1,289,447
-
791,863
1,419,504
￦ 130,057
￦ 52,456,004
Liabilities at
fair value
through the
profit and loss
Financial
liabilities
measured at
amortized cost
40,932
￦ 18,509,490
4,775,339
1,280,124
3,682,472
1,024,804
7,818,742
￦ 40,932
￦ 37,090,971
37
￦
Total
655,969
￦
-
Available-forsale financial
assets
￦ 3,879,567
Other
financial
liabilities
￦
￦ 56,465,628
Total
4,878,383
-
￦ 18,509,490
9,653,722
1,280,124
3,682,472
1,024,804
7,859,674
￦ 4,878,383
￦ 42,010,286
-
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(B) Income and loss of financial instruments by category for the years ended December 31, 2012 and 2011, are
as follows:
(1) As of December 31, 2012
(In millions of Korean won)
Assets at fair value
through the profit and loss
Financial Assets
Gain on valuation
(Other comprehensive gain)
Gain/(Loss) on valuation/disposal
Gain on disposal (Reclassification)
Interest income
Foreign exchange differences
(Financial income)
Foreign exchange differences
(Financial expense)
￦
-
Loans
and receivables
￦
Available-for-sale
financial assets
￦
-
Total
￦
1,185,256
1,185,256
(74,609)
-
28,915
840,150
105,192
23,072
5,281
59,498
23,072
845,431
-
2,213,693
-
2,213,693
-
(2,569,682)
-
(2,569,682)
Dividend income
-
-
106,181
106,181
Impairment/Reversal (Profit or loss)
-
-
(94,466)
(94,466)
(In millions of Korean won)
Financial Liabilities
Loss on valuation/disposal
(Profit or loss)
Interest expense
Foreign exchange differences
(Financial income)
Foreign exchange differences
(Financial expense)
Liabilities at fair value
through the profit and loss
￦
Financial liabilities
Other Financial
measured at amortized cost
Liabilities
￦
(125,553)
-
￦
-
Total
￦
(125,553)
-
277,512
321,494
599,006
-
4,037,004
43,909
4,080,913
-
(4,019,066)
-
(4,019,066)
38
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(2) As of December 31, 2011
(In millions of Korean won)
Assets at fair value
through the profit and loss
Financial Assets
Loss on valuation
(Other comprehensive loss)
Gain on valuation/disposal
Gain on disposal (Reclassification)
Interest income
Foreign exchange differences
(Financial income)
Foreign exchange differences
(Financial expense)
￦
-
Loans
and receivables
￦
Available-for-sale
financial assets
￦
-
(559,831) ￦
Total
(559,831)
113,401
-
702,198
102,350
134,202
3,455
215,751
134,202
705,653
-
4,025,356
-
4,025,356
-
(4,481,568)
(2,924)
(4,484,492)
Dividend income
-
-
34,423
34,423
Impairment/Reversal (Profit or loss)
-
-
(39)
(39)
(In millions of Korean won)
Financial Liabilities
Loss on valuation/disposal
(Profit or loss)
Interest expense
Foreign exchange differences
(Financial income)
Foreign exchange differences
(Financial expense)
Liabilities at fair value
through the profit and loss
￦
Financial liabilities
Other Financial
measured at amortized cost
Liabilities
￦
(1,865)
-
￦
- ￦
Total
(1,865)
-
270,929
373,204
644,133
-
2,056,604
38,788
2,095,392
-
(2,288,844)
(12,229)
(2,301,073)
39
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. Credit Quality of Financial Assets
The credit quality of financial assets that are neither past due nor impaired is assessed by reference to external credit
ratings as of December 31, 2012 and 2011 as follows:
-
Superior ability to repay: Aaa~Aa (Moody's), AAA~AA (S&P, Fitch), A1 (Credit rating agencies in Korea)
Strong ability to repay: A (Moody's), A (S&P, Fitch), A2 (Credit rating agencies in Korea)
Acceptable ability to repay: Baa (Moody's), BBB (S&P, Fitch), A3 (Credit rating agencies in Korea)
Currently having the ability to repay: Ba~B (Moody's), BB~B (S&P, Fitch), B (Credit rating agencies in Korea)
Group 1: Customers with the trade payables guaranteed by credit insurance or collateral
Group 2: Customers experienced impairment of capital. As the trade payables are guaranteed by credit insurance
or collateral, all default risk has been relieved
(A) Accounts receivables
(In millions of Korean won)
2012
2011
Counterparties with external credit rating
￦
Superior ability to repay
1,818,158
￦
1,983,246
Strong ability to repay
3,742,515
3,813,989
Acceptable ability to repay
3,217,663
2,981,747
Currently having the ability to repay
3,834,957
2,857,491
￦
12,613,293
￦
11,636,473
Counterparties without external credit rating
Group 1
8,680,397
8,658,198
Group 2
50,160
67,456
￦
8,730,557
￦
8,725,654
￦
21,343,850
￦
20,362,127
(B) Cash equivalents and short-term financial instruments
(In millions of Korean won)
2012
Superior ability to repay
\
Strong ability to repay
Acceptable ability to repay
Currently having the ability to repay
Others1
\
1
2011
2,850,476
\
32,675,712
24,448,843
505,631
278,216
12,896
15,397
131,782
85,153
36,176,497
\
Short-term financial instruments at financial institutions (Credit union etc.) without external credit rating
40
1,378,015
26,205,624
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8. Transfers of Financial Assets
Trade receivables have been discounted through factoring agreements with banks. Collateral (trade receivables and
other) provided in transactions of discount and factoring of trade receivables do not meet the requirements for asset
derecognition as risks and rewards are not substantially transferred in the event the debtor defaults. Financial
liabilities recognized in relation to these transactions are included as short-term borrowings in the statement of
financial position (Note 15).
The following table presents a break down of discounted trade receivables as of December 31, 2012 and 2011:
(In millions of Korean won)
1
December 31, 2012
December 31, 2011
Carrying amount of the discounted trade receivables1
￦
4,328,503
￦
4,878,383
Carrying amount of the related borrowing
￦
4,328,503
￦
4,878,383
The discounted trade receivables include intercompany balances.
9. Available-for-Sale Financial Assets
The changes of available-for-sale financial assets are as follows:
(In millions of Korean won)
2012
Balance as of January 1
Acquisitions
-Increase from business combinations
Disposals
Changes in value, net of tax
2011
￦ 3,879,567
￦ 4,199,358
2,630,247
2,309,143
16,544
1,018
(1,171,666)
(2,004,296)
1,185,256
(559,831)
Impairment losses
(28,009)
(39)
Translation and exchange difference
(19,302)
1,007
11,956
(65,775)
Others
￦ 6,488,049
￦ 3,879,567
A)
Current portion
1,258,874
655,969
B)
Non-current portion
5,229,175
3,223,598
Balance as of December 31
41
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(A) Short-term available-for-sale financial assets
Short-term available-for-sale financial assets as of December 31, 2012 and 2011 consist of national bonds and
beneficiary certificates whose maturities are within 1 year.
(In millions of Korean won)
2012
National bonds
Beneficiary certificates1
1
2011
￦
1
1,258,873
￦
655,969
￦
1,258,874
￦
655,969
Beneficiary certificates as of December 31, 2012 and 2011 consist of follows:
(In millions of Korean won)
2012
Bonds
Time deposits
Call loan
Others
2011
￦
1,159,290
238
85,200
14,145
￦
647,379
715
7,875
￦
1,258,873
￦
655,969
For the years ended December 31, 2012 and 2011, changes in valuation gain (loss) recognized in equity (other
comprehensive income) on short-term available-for-sale financial assets are as follows:
(In millions of Korean won)
2012
2011
￦
5,969
8,873
(5,969)
8,873
(2,147)
￦ 6,726
Balance at January 1
Fair value gains
Net gains transferred from equity
Balance at December 31
Deferred income tax and minority interest
￦ 9,144
5,969
(9,144)
5,969
(1,444)
￦ 4,525
(B) Long-term available-for-sale financial assets
Long-term available-for-sale financial assets as of December 31, 2012 and 2011 are as follows:
Equity securities-Listed
Equity securities-Unlisted
Debt securities1
Detail
(1)
(2)
1
2012
￦ 4,435,856
667,325
125,994
￦ 5,229,175
2011
￦ 2,526,187
623,739
73,672
￦ 3,223,598
The maximum exposure to credit risk of debt securities that are available-for-sale financial assets is the carrying value as of
December 31, 2012 and 2011.
42
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(1) Equity securities-Listed (Except for Associates and Joint Ventures)
Listed equity securities as of December 31, 2012 and 2011, are as follows:
(In millions of Korean won, except for the number of shares and percentage)
Number of
Shares Owned
Samsung Heavy Industries
Samsung Fine Chemicals
Hotel Shilla
Cheil Worldwide
iMarket Korea
A-Tech Solution1
SFA
KT Skylife
ASML
CSR
Rambus1
Seagate Technology
Others1
40,675,641
2,164,970
2,004,717
2,998,725
647,320
1,592,000
1,822,000
240,000
12,595,575
9,925,000
4,788,125
45,239,490
-
2012
Percentage
of Ownership(%) Acquisition Cost
￦ 258,299
17.6
8.4
45,678
5.0
13,957
2.6
2,920
1.8
324
15.9
26,348
10.2
38,262
0.5
3,000
3.0
726,024
4.9
59,612
4.3
92,682
12.0
788,454
35,809
￦ 2,091,369
2011
Book Value
￦ 1,568,046
132,063
88,107
64,623
18,416
11,606
85,998
8,028
856,253
58,765
24,976
1,474,032
44,943
￦ 4,435,856
Book Value
￦ 1,134,850
132,063
77,182
56,826
10,487
17,830
111,142
6,576
41,692
855,665
81,874
￦ 2,526,187
1
The impairment loss of ￦85,280 million is recognized relating to A-Tech Solution and Rambus,etc. as the fair value decreased
steadily below the acquisition cost.
The difference between the acquisition cost and the current fair value, after income tax effects, is recorded within
other components of equity (unrealized gains or losses on available-for-sale financial assets)
(2) Equity securities-Unlisted (Except for Associates and Joint ventures)
Unlisted equity securities as of December 31, 2012 and 2011 are as follows:
(In millions of Korean won, except for the number of shares and percentage)
Number of
Shares Owned
Kihyup Technology
Pusan Newport1
Samsung Venture
Samsung Petrochemical
Samsung General
Chemicals
icube Investment
Maltani Lighting
SK Telink
CSOT2
Nanosys
OpenX
Voltaix
Others3
1,000,000
1,135,307
980,000
514,172
1,914,251
40
9,000
14,609
13,100,436
8,899,172
7,785
-
2012
Percentage
of Ownership(%) Acquisition Cost
￦
5,000
17.2
1.0
5,677
16.3
4,900
13.0
8,040
3.9
16.2
15.0
1.1
15.0
13.0
3.5
5.8
-
43
2011
Book Value
￦
5,000
5,677
6,053
84,427
Book Value
￦
5,000
5,677
5,835
91,489
19,143
4,000
16,544
4,357
278,130
17,861
10,738
13,671
157,934
74,487
4,000
16,225
4,357
278,130
17,861
10,738
13,671
146,699
71,365
4,000
4,357
278,130
17,861
140,025
￦ 545,995
￦ 667,325
￦ 623,739
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1
As of December 31, 2012, the Company’s investments in Pusan Newport are pledged as collateral against the investee's debt
(Note 19).
2
Nonmarketable shares are measured at cost because the variation of reasonable fair value estimates is not insignificant and the
probabilities of the various estimates and applicable discount rate cannot be reasonably assessed (Note 32).
3
Impairment losses on unlisted equity securities resulting from the decline in realizable value below the acquisition cost amounted
to ￦2,235 million and ￦39 million for the year ended December 31, 2012 and 2011, respectively.
For the years ended December 31, 2012 and 2011, changes in valuation gain (loss) on long-term available-for-sale
financial assets are as follows:
(In millions of Korean won)
2012
2011
Balance at January 1
Fair value gains(losses)
Net gains (losses) transferred from equity
Balance at December 31
Deferred income tax and minority interest
￦
1,367,331
Total
￦
1,176,383
29,041
2,572,755
(577,945)
1,994,810
￦
2,058,189
￦
(565,800)
(125,058)
1,367,331
(331,008)
1,036,323
10. Trade and other receivables
All current trade and other receivables are due within 1 year from the end of the reporting period. The carrying
amount is a reasonable approximation of fair value for current trade and other receivables, with the effect of
discounting being insignificant.
(A) Trade and other receivables as of December 31, 2012 and 2011, are as follows:
2012
(In millions of Korean won)
Receivables
Less:
Allowances for impairment
Trade receivables, net
Less: Non-current portion
Current portion
2011
Trade
Non-Trade
Trade
Non-Trade
￦ 24,168,427
￦ 2,834,187
￦ 22,133,741
￦ 2,311,996
(276,787)
￦ 23,891,640
(2,595)
￦ 2,831,592
(214,597)
￦ 21,919,144
(37,833)
￦ 2,274,163
(30,405)
￦ 23,861,235
(18,231)
￦ 2,813,361
(37,017)
￦ 21,882,127
(3,262)
￦ 2,270,901
The Company transferred receivable balances to financial institutions in exchange for cash. The outstanding balances
of transferred receivable balances amounting to ￦4,328,503 million and ￦4,878,383 million have been accounted
for as borrowings as of December 31, 2012 and 2011 (Note 15).
44
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(B) Movements on the provision for impairment of trade receivables are as follows:
2012
(In millions of Korean won)
Balance on January 1
Provision for receivables
impairment
Receivables written off during
the year as uncollectible
Unused amounts reversed
Others
Balance on December 31
2011
Trade
Non-Trade
Trade
Non-Trade
￦ (214,597)
￦ (37,833)
￦ (185,758)
￦ (19,585)
(181,751)
(20,351)
(78,202)
(11,478)
18,752
98,163
2,646
￦ (276,787)
28,203
26,721
665
￦ (2,595)
7,345
56,539
(14,521)
￦ (214,597)
224
11,561
(18,555)
￦ (37,833)
(C) An aging analysis of trade and other receivables as of December 31, 2012 and 2011, is as follows:
(In millions of Korean won)
Receivables not past due
Receivables past due, not impaired¹ :
Less than 31 days overdue
Bad debts² :
31 days to 90 days overdue
90 days overdue or more
December 31, 2012
￦ 24,151,060
December 31, 2011
￦ 22,467,108
2,226,759
1,351,566
231,343
393,452
￦ 27,002,614
339,107
287,956
￦ 24,445,737
¹ The Company does not consider receivables that are overdue for less than or equal to 31 days as impaired.
² The balance of allowance for doubtful debts as of December 31, 2012 amounts to ￦279,382 million (2011: ￦252,430 million).
(D) The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable
mentioned above. As of December 31, 2012, the Company has credit insurance with Korea Trade Insurance
and overseas insurance companies against its export accounts receivables from approved foreign customers.
11. Inventories
Inventories as of December 31, 2012 and 2011, are as follows:
(In millions of
Korean won)
Finished goods
Work in Process
Raw materials and
supplies
Materials-in-transit
Gross Amount
￦ 7,003,826
3,623,572
2012
Valuation
Allowance
￦ (166,576)
(392,996)
Book Value
￦6,837,250
3,230,576
5,239,262
2,598,191
￦18,464,851
(157,866)
￦ (717,438)
5,081,396
2,598,191
￦ 17,747,413
Gross Amount
￦6,105,312
3,454,823
2011
Valuation
Allowance
￦ (199,432)
(383,461)
Book Value
￦ 5,905,880
3,071,362
4,673,143
2,252,853
￦16,486,131
(186,523)
￦ (769,416)
4,486,620
2,252,853
￦ 15,716,715
The inventories recognized as expense and included in ‘cost of sales’ amounted to ￦125,746,083 million (2011:
￦110,802,871 million) in which inventory valuation loss of ￦367,279 million (2011: ￦575,332 million) is included.
45
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
12. Associates and Joint Ventures
(A) Changes in investments in associates and joint ventures for the years ended December 31, 2012 and 2011,
are as follows:
(In millions of Korean won)
2012
Balance at January 1
Acquisition
Disposal
Share of profit
Others 1
￦
￦ 8,335,290
403,538
(298,375)
1,399,194
(635,478)
￦ 9,204,169
9,204,169
279,022
(21,891)
986,611
(1,662,422)
￦ 8,785,489
Balance at December 31
1
2011
Others consist of dividends, business combination, and the effect of change in foreign exchange rates, etc.
(B) Major associates and Joint Ventures as of December 31, 2012, consist of the following:
(1) Associates
Investee
Samsung Card
Samsung Electro-Mechanics
Samsung SDI
Samsung SDS
Samsung Techwin
1
Industry
Finance
Manufacture of electronic components, computers,
videos, sound and communication equipments
Manufacture of electronic components, computers,
videos, sound and communication equipments
Computer programming, system integration and
management
Manufacture of electronic components, computers,
videos, sound and communication equipments
Percentage of
Ownership (%)1
Region
37.5
Korea
23.7
Korea
20.4
Korea
21.7
Korea
25.5
Korea
The ownership represents the Company’s ownership of the voting rights in the entity.
(2) Joint ventures
Investee
Industry
Percentage of
Ownership (%)1
Region
Samsung Corning Precision Materials
TFT- LCD components Manufacturing and retail
42.5
Korea
Samsung Corning Advanced Glass
Manufacture of other industrial glass devices
50.0
Korea
1
The ownership represents the Company’s ownership of the voting rights in the entity.
46
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(C) Details of investments in associates and joint ventures as of December 31, 2012 and 2011 are as follows:
(1) Associates
(In millions of Korean won)
Investee
SamsungCard
Samsung ElectroMechanics
Samsung SDI
Samsung SDS
Samsung Techwin
Others
Total
2012
Net asset value
Acquisition cost
￦ 1,538,540
￦ 2,221,201
￦ 2,238,073
359,237
423,722
17,967
174,531
461,599
￦ 2,975,596
887,933
1,450,811
689,874
401,146
513,580
￦ 6,164,545
890,460
1,174,183
701,808
360,739
457,016
￦ 5,822,279
(In millions of Korean won)
Investee
Samsung Card
Samsung ElectroMechanics
Samsung SDI
Samsung SDS
Samsung Techwin
Samsung LED
Others
Total
Book value
2011
Net asset value
Acquisition cost
Book value
￦ 1,538,540
￦ 2,167,986
￦ 2,184,855
359,237
423,722
17,967
174,531
180,916
269,787
￦ 2,964,700
883,680
1,242,699
643,578
417,708
311,545
354,602
￦ 6,021,798
799,792
1,185,509
632,593
370,379
340,145
371,909
￦ 5,885,182
(2) Joint ventures
(In millions of Korean won)
Investee
Samsung Corning
Precision Materials
Samsung Corning
Advanced Glass
Others
Total
(In millions of Korean won)
Investee
Samsung Corning
Precision Materials
Others
Total
2012
Net asset value
Acquisition cost
Book value
￦ 297,165
￦ 2,825,104
￦ 2,794,617
115,000
419,461
￦ 831,626
114,274
64,193
￦ 3,003,571
114,274
54,319
￦ 2,963,210
2011
Net asset value
Acquisition cost
￦ 297,165
419,461
￦ 716,626
￦ 3,191,077
145,870
￦ 3,336,947
47
Book value
￦ 3,089,298
229,689
￦ 3,318,987
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(D) Gain/loss on valuation of equity
(1) 2012
Balance at
January 1
Samsung Card
Samsung Electro-Mechanics
Other comprehensive
gains
￦ 2,184,855
￦ 264,688
Balance on
December 31
Others1
￦ (181,217)
￦ (30,253)
￦ 2,238,073
799,792
102,946
11,689
(23,967)
890,460
1,185,509
31,256
(30,531)
(12,051)
1,174,183
Samsung SDS
632,593
89,157
(16,488)
(3,454)
701,808
Samsung Techwin
370,379
39,356
(27,171)
(21,825)
360,739
Samsung LED
Samsung Corning Precision
Materials
Samsung Corning Advanced
Glass
340,145
(22,519)
(712)
(316,914)
-
3,089,298
644,242
(10,300)
(928,623)
2,794,617
Samsung SDI
Others
Total
1
Gain/loss on
valuation
-
(726)
-
115,000
114,274
601,598
(161,789)
(95,761)
167,287
511,335
￦ 9,204,169
￦ 986,611
￦ (1,054,800)
￦ 8,785,489
￦ (350,491)
Others include acquisitions, disposals, dividends and changes in currency exchange rates.
(2) 2011
Balance at
January 1
Samsung Card
Samsung Electro-Mechanics
￦
Other comprehensive
gains
132,331
￦
Balance on
December 31
Others1
(80,800)
￦ (67,830)
￦ 2,184,855
793,932
78,179
(50,307)
(22,012)
799,792
1,172,130
63,242
(11,274)
(38,589)
1,185,509
Samsung SDS
569,678
74,382
(2,939)
(8,528)
632,593
Samsung Techwin
269,360
65,684
42,245
(6,910)
370,379
Samsung LED
Samsung Corning Precision
Materials
306,005
30,669
3,471
-
340,145
2,599,010
975,221
(7,588)
(477,345)
3,089,298
424,021
(20,514)
(6,706)
204,797
￦ 8,335,290
￦ 1,399,194
Samsung SDI
Others
Total
1
￦ 2,201,154
Gain/loss on
valuation
￦
(113,898)
Others include acquisitions, disposals, dividends and changes in currency exchange rates.
48
￦ (416,417)
601,598
￦ 9,204,169
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(E) Summarized financials of associates and joint ventures as of and for the year ended December 31, 2012
and 2011, are as follows:
(1) Associates
(In millions of Korean won)
Investee
Samsung Card
Samsung ElectroMechanics
Samsung SDI
Samsung SDS
Samsung Techwin
Samsung LED
(In millions of Korean won)
Investee
Samsung Card
Samsung ElectroMechanics
Samsung SDI
Samsung SDS
Samsung Techwin
Samsung LED
2012
Assets
Liabilities
Sales
Net Income
￦ 16,287,816
￦ 10,357,253
￦ 3,817,670
￦ 749,875
6,891,464
10,895,087
4,465,407
3,240,938
-
2,925,816
3,330,606
1,220,467
1,663,263
-
7,912,830
5,771,185
6,105,858
2,934,702
367,423
440,803
1,471,502
395,805
131,324
(51,164)
2011
Assets
Liabilities
Sales
Net Income
￦ 16,135,253
￦ 9,991,910
￦ 3,196,455
￦ 374,831
7,455,731
8,527,411
4,027,597
3,223,454
1,454,193
3,579,943
2,212,884
1,057,695
1,582,808
831,104
7,624,623
5,443,883
4,765,178
3,171,532
1,292,245
349,473
320,109
324,767
241,014
64,783
49
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(2) Joint Ventures - A listing of interests in significant joint ventures and the proportion of ownership
interest held in jointly controlled entities is as follows:
(In millions of Korean won)
Current Assets
Non-Current Assets
Total Assets
Current Liabilities
Non-Current Liabilities
Net Assets
Sales
Expense
Net income
(In millions of Korean won)
Current Assets
Non-Current Assets
Total Assets
Current Liabilities
Non-Current Liabilities
Net Assets
Total Sales
Total Expense
Net income
2012
Samsung Corning
Advanced Glass
Samsung Corning
Precision Materials
￦ 1,457,132
1,585,498
3,042,630
183,321
34,205
2,825,104
1,465,702
889,924
575,778
￦ 93,842
25,834
119,676
5,351
51
114,274
17,913
18,639
(726)
2011
Siltronic
Samsung Wafer
Samsung Corning
Precision Materials
￦ 1,759,181
1,742,956
3,502,137
251,287
59,773
3,191,077
2,066,427
1,086,094
980,333
￦ 100,952
343,751
444,703
76,932
300,929
66,842
157,084
194,764
(37,680)
Others
Total
￦ 179,238
336,801
516,039
153,440
298,406
64,193
724,437
788,540
(64,103)
￦ 1,730,212
1,948,133
3,678,345
342,112
332,662
3,003,571
2,208,052
1,697,103
510,949
Others
Total
￦ 176,899
40,346
217,245
138,217
79,028
749,809
740,522
9,287
￦ 2,037,032
2,127,053
4,164,085
466,436
360,702
3,336,947
2,973,320
2,021,380
951,940
(F) Market value information of publicly listed associates as of December 31, 2012 is as follows:
December 31, 2012
(In millions of Korean won,
except for number of shares)
Samsung SDI
Samsung ElectroMechanics
Samsung Card
Samsung Techwin
Number of shares held
December 31, 2011
9,282,753
Market value
￦ 1,401,696
Market value
￦ 1,239,248
17,693,084
43,393,170
13,526,935
1,755,154
1,583,851
807,558
1,374,753
1,687,994
719,633
50
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13. Property, Plant and Equipment
(A) Changes in property, plant and equipment for the years ended December 31, 2012 and 2011, are as follows:
(In millions of Korean won)
Land
Balance at January 1, 2012
Buildings and
Structures
2012
Construction
Machinery
-In-Progress/
and
MachineryEquipment
In-Transit
Others
Total
￦ 7,214,734
￦ 12,778,760
￦ 33,453,220
￦ 6,982,473
Acquisition cost
Accumulated depreciation and
impairment
7,214,734
18,472,852
96,618,176
6,982,473
4,683,845
133,972,080
-
(5,694,092)
(63,164,956)
-
(3,069,081)
(71,928,129)
Acquisition and capital expense1
Business combinations
54,960
-
1,681,106
-
18,302,895
654,490
1,854,111
21,612
956,723
29,007
22,849,795
705,109
Depreciation
Sale / Disposal /
(76,724)
(1,121,614)
(100,854)
(12,895,133)
(604,989)
(22,213)
(818,299)
(114,292)
(14,835,046)
(919,072)
Impairment
Others
(40,829)
(3,992)
(224,567)
(211,299)
(653,008)
(343,098)
(34)
116,833
(215,325)
(1,144,669)
￦ 7,152,141
￦ 13,008,839
￦ 38,046,176
￦ 8,492,885
7,152,141
19,624,030
110,034,355
8,492,885
5,011,914
150,315,325
-
(6,615,191)
(71,988,179)
-
(3,227,212)
(81,830,582)
Balance at December 31, 2012
Acquisition cost
Accumulated depreciation and
impairment
￦ 1,614,764 ￦ 62,043,951
￦ 1,784,702 ￦ 68,484,743
1
The capitalized borrowing costs are ￦36,129 million and the interest rate used to calculate the borrowing costs eligible for
capitalization is 2.50%
Buildings and
Structures
(In millions of Korean won)
Land
Balance at January 1, 2011
￦ 6,631,392
2011
ConstructionMachinery
In-Progress/
and
MachineryEquipment
In-Transit
￦ 10,312,316 ￦ 26,474,573
Acquisition cost
Accumulated depreciation and
impairment
6,631,392
15,055,715
81,456,534
-
(4,743,399)
Acquisition and capital expense1
553,058
3,443,087
53,771
(22,394)
(1,093)
Business combinations
Depreciation
Sale / Disposal
Impairment
Others
Balance at December 31, 2011
Acquisition cost
Accumulated depreciation and
impairment
￦ 7,214,734
Others
Total
￦ 8,243,827 ￦ 1,302,486 ￦ 52,964,594
8,243,827
4,147,859
115,535,327
(54,981,961)
-
(2,845,373)
(62,570,733)
18,596,927
(966,244)
1,046,373
22,673,201
55,605
(980,863)
5,522
(11,244,032)
451
-
8,620
(709,379)
123,969
(12,934,274)
(49,794)
(4,923)
3,332
(376,727)
(81,641)
78,598
(295,561)
(83,507)
(55)
50,226
(532,422)
(86,619)
(164,498)
￦ 12,778,760 ￦ 33,453,220
￦ 6,982,473 ￦ 1,614,764 ￦ 62,043,951
7,214,734
18,472,852
96,618,176
6,982,473
4,683,845
133,972,080
-
(5,694,092)
(63,164,956)
-
(3,069,081)
(71,928,129)
1
The capitalized borrowing costs are ￦46,863 million and the interest rate used to calculate the borrowing costs eligible for
capitalization is 4.35%
51
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(B) Details of property, plant and equipment’s depreciation by line item as of December 31, 2012 and 2011, are
as follows:
(In millions of Korean won)
2012
Cost of sales
2011
￦ 13,666,700
￦ 11,945,495
442,080
368,123
Selling, general and administrative expenses
Research and development expenses
726,266
620,656
￦ 14,835,046
￦ 12,934,274
14. Intangible Assets
(A) Changes in intangible assets for the years ended December 31, 2012 and 2011, are as follows:
2012
Intellectual
property rights
At January 1, 2012
Internally generated
(development costs)
External acquisition
Business Combinations
Amortization
Sale / Disposal
Impairment
Others
Balance at December 31, 2012
Capitalized
cost
Membership
￦ 983,802
￦ 473,024
227,538
Goodwill
Others
Total
￦ 197,957
￦ 523,409
￦1,177,044 ￦ 3,355,236
359,639
-
-
-
359,639
-
9,520
-
64,832
301,890
163,164
-
3,670
259,961
71,917
498,712
(169,668)
(229,186)
-
-
(388,116)
(786,970)
(13,123)
-
(39,095)
-
(980)
(53,198)
(124)
(1,203)
-
(204,746)
(10,717)
(216,790)
(5,556)
-
(1,209)
(4,779)
282,730
271,186
￦ 1,186,033
￦ 602,274
￦ 170,843
￦ 573,845
￦1,196,710
￦ 3,729,705
2011
(In millions of Korean won)
At January 1, 2011
Internally generated
(development costs)
External acquisition
Business Combinations
Amortization
Sale / Disposal
Impairment
Others
Balance at December 31, 2011
Intellectual
property rights
Capitalized
cost
Membership
Goodwill
Others
Total
￦ 601,882
￦ 334,617
￦ 191,431
￦ 571,412
￦1,080,097
￦ 2,779,439
-
331,576
-
-
-
331,576
260,399
-
3,494
332,102
234,644
-
(125,636)
(193,169)
-
(18,927)
-
(85)
-
31,525
￦ 983,802
-
68,209
135,118
181,455
551,217
-
(338,985)
(657,790)
(93)
-
(5,109)
(24,129)
-
(183,145)
(236)
(183,466)
-
3,125
24
191,613
226,287
￦ 473,024
￦ 197,957
￦ 523,409
￦1,177,044
￦ 3,355,236
52
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(B) Goodwill
Goodwill is allocated to Cash-Generating Units at the end of the reporting period, and consists of the following:
(In millions of Korean won)
2012
2011
₩ 112,723
S. LSI business
Memory business
Health care equipment business
Digital Imaging business
LCD business
LED business
Others
₩
74,995
89,258
82,599
80,299
79,277
54,694
₩ 573,845
Total
-
39,883
80,799
287,199
80,299
35,229
₩ 523,409
Goodwill impairment reviews are undertaken annually. Impairment tests suggest that, except for Samsung Digital
Imaging, the carrying values of cash generating units do not exceed the recoverable amounts. The recoverable
amounts of cash-generating units have been determined based on value-in-use calculations. These calculations use
pre-tax cash flow projections based on financial budgets approved by management covering a five-year period. Cash
flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate
does not exceed the long-term average growth rate for the business in which Samsung Digital Imaging operates. In
addition, a constant growth rate assumption is used for perpetual cash flow calculation.
The Digital Imaging Division has posted consecutive deficits for several years and is not expected to be profitable in
the near future so that the Company recognized an impairment of goodwill. The major assumptions calculating the
value in use of the Digital Imaging Division are as followings:
Samsung Digital Imaging
2012
2011
Sales profit margin rate
0.9
2.3
Sales growth rate1
6.7
13.6
Perpetual growth rate2
(2.4)
2.1
Pre-tax discount rate3
15.6
13.6
1
Future cashflow of 5 years are projected based on previous growth rate and the industry estimates.
The projected growth rate beyond five years is consistent with industry estimates.
3
Pre-tax discount rate applied to the cash flow projections
2
Sales growth rate were determined on the basis of past performance and expectations of market fluctuations. The
discount rate reflects the special risk related to the division.
The carrying value of Samsung Digital Imaging exceeded the value in use by ￦204,600 million in 2012 and
￦183,145 million in 2011 and the amounts have been recognized as the other non-operating expenses - net in the
consolidated income statements.
53
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(C) Amortization of intangible assets as of December 31, 2012 and 2011 is classified as follows:
(In millions of Korean won)
Account
2012
Cost of sales
Selling general and administrative expenses
Research and development expenses
￦
Total
￦
2011
￦
327,869
353,909
105,192
786,970
￦
266,101
300,497
91,192
657,790
15. Borrowings
(A) Borrowings as of December 31, 2012 and 2011, are as follows:
(In millions of Korean won)
Short-term Borrowings
Collateralized borrowings1
Without collateralized
borrowings
Financial
Institutions
Annual Interest Rates (%)
as of December 31, 2012
Shinhan Bank, etc
0.9 ~ 5.1
￦ 4,328,503
￦ 4,878,383
BOA etc,
0.5 ~ 15.1
4,115,249
￦ 8,443,752
4,775,339
￦ 9,653,722
MIZUHO Bank, etc
APCI, etc
1.6 ~ 4.6
2.2 ~15.7
￦ 480,567
13,293
￦ 493,860
￦ 10,820
13,936
￦ 24,756
SMBC, etc
CSSD, etc
0.7 ~ 5.3
2.2 ~ 15.7
￦ 3,521,257
101,771
￦ 3,623,028
￦ 3,559,554
122,918
￦ 3,682,472
Total
Current Portion of long-term
Borrowings
Bank borrowings
Financial lease liabilities2
Total
Long-term Borrowings
Bank borrowings
Financial lease liabilities2
Total
1
2
2012
2011
Collateralized borrowings are secured by trade receivables (Note 8).
Leased property, plant and equipment were pledged as collateral (Note 19).
(B) Maturities of long-term borrowings, outstanding as of December 31, 2012, are as follows:
(In millions of Korean won)
Long-term borrowings in local currency
For the Years Ending December 31
2013
2014
2015
2016
Thereafter
￦
493,860
2,583,907
380,722
573,564
84,835
￦ 4,116,888
Total
54
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16. Debentures
Debentures as of December 31, 2012 and 2011, consist of the following:
(In millions of Korean won)
2012
2011
￦
Korean won denominated debenture(A)
Foreign currency denominated debenture(B)
Total
697,822
￦ 1,197,079
1,131,552
￦ 1,829,374
83,045
￦ 1,280,124
(A) Korean won denominated debentures as of December 31, 2012 and 2011, consist of the following:
(In millions of Korean won)
Issue Date
Due Date
Annual Interest Rates (%)
as of December 31, 2011
Unsecured debentures
Unsecured debentures
Unsecured debentures
2010.6.17
2011.11.17
2011.11.17
2013.6.17
2014.11.17
2016.11.17
4.7
4.1
4.2
2012
Less: Current portion
Less: Discounts
Total
2011
500,000
500,000
200,000
500,000
500,000
200,000
(500,000)
(2,178)
697,822
(2,921)
1,197,079
Samsung Display, SEC’s domestic subsidiary, issued Korean won denominated debentures as above table.
(B) Debentures denominated in foreign currencies as of December 31, 2012 and 2011, consist of the
following:
(In millions of Korean won)
US dollar denominated
straight bonds1
US dollar denominated
unsecured bonds2
Less: Current portion
Less: Discounts
Total
Issue Date
Due Date
Annual Interest Rates (%)
as of December 31, 2012
1997.10.2
2027.10.1
7.7
2012.4.10
2017.4.10
1.8
1
2012
2011
￦ 80,333
(US$75 million)
1,071,100
(US$ 1,000 million)
(5,150)
(14,731)
￦ 1,131,552
￦ 92,264
(US$80 million)
(5,536)
(3,683)
￦ 83,045
US dollar straight bonds are repaid for twenty years after a ten-year grace period from the date of issuance. Interest is paid semiannually.
2
Samsung Electronics America issued dollar denominated unsecured bonds. Repayment of these debentures is due on the date of
maturity and interest is paid semi-annually.
55
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(C) Maturities of debentures outstanding as of December 31, 2012 are as follows:
(In millions of Korean won)
For the Years Ending December 31
Debentures
￦
505,356
505,356
5,356
205,356
1,130,009
￦ 2,351,433
2013
2014
2015
2016
Thereafter
Total
17. Retirement Benefit Liabilities
(A) Defined benefit liability recognized on the statements of finance position as of December 31, 2012 and 2011,
is as follows:
(In millions of Korean won)
2012
Present value of funded defined benefit obligation
Present value of unfunded defined benefit
Subtotal
Fair value of plan assets
Total
￦
￦
2011
￦
4,593,284
76,183
4,669,467
(2,939,528)
1,729,939
3,283,629
258,711
3,542,340
(2,423,152)
￦ 1,119,188
(B) The amounts recognized in the income statements for the years ended December 31, 2012 and 2011, are as
follows:
(In millions of Korean won)
2012
￦
Current service cost
Interest cost
The effect of any settlement or curtailment
￦
2011
￦
670,123
58,591
8,033
736,747
￦
508,958
39,901
11,941
560,800
(C) The amounts recognized as cost of defined contribution plan for the years ended December 31, 2012 and
2011, are ￦31,676 million and ￦23,296 million, respectively.
(D) Remeasurement impact recognized as other comprehensive income for the years ended December 31, 2012
and 2011, are as follows:
(In millions of Korean won)
2012
2011
￦ 657,804
(153,684)
￦ 504,120
Remeasurement impact before income tax
Income tax effect
Remeasurement impact after income tax
56
￦ 508,928
(123,714)
￦ 385,214
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(E) The pension expenses related to defined-benefit plans recognized in the statement of income for the years
ended December 31, 2012 and 2011, are allocated to the following accounts:
(In millions of Korean won)
2012
2011
￦
￦ 247,908
121,213
191,679
￦ 560,800
291,355
185,125
260,267
￦ 736,747
Cost of sales
Selling, general and administrative expenses
Research and development expenses
(F) Changes in the carrying amount of defined benefit obligations for the years ended December 31, 2012 and
2011, are as follows:
(In millions of Korean won)
2012
Balance at the beginning of the year
Current service cost
Interest cost
Remeasurement :
Loss from change in demographic assumptions
Loss from change in financial assumptions
Others
Benefits paid
Foreign exchange
Others
Balance at the end of the year
2011
￦ 3,542,340
￦ 2,621,192
670,123
194,625
508,958
160,605
81,587
473,488
55,396
(301,444)
(22,028)
(24,620)
￦ 4,669,467
291,946
176,829
(256,261)
18,591
20,480
￦ 3,542,340
(G) The movement in the fair value of plan assets for the years ended December 31, 2012 and 2011, are as
follows:
(In millions of Korean won)
2012
2011
￦ 2,423,152
136,034
(47,333)
595,420
(155,000)
(8,812)
(3,933)
￦ 2,939,528
Balance at the beginning of the year
Expected return on plan assets
Remeasurement factor of plan assets
Contributions by the employer
Benefits paid
Foreign exchange
Others
Balance at the end of the year
￦ 1,797,706
120,704
(40,153)
555,815
(72,179)
(92)
61,351
￦ 2,423,152
Expected contributions to retirement benefit plans for the year ending December 31, 2013, are ￦947,072 million.
57
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(H) The principal actuarial assumptions as of December 31, 2012 and 2011 are as follows:
(In %)
Discount rate
Future salary increases (including inflation)
2012
2011
3.7 ~ 7.0
2.5 ~ 9.0
4.9 ~ 7.5
2.6 ~ 9.9
The expected return on plan assets is based on the expected return multiplied with the respective percentage weight of
the market-related value of plan assets. The expected return is defined on a uniform basis, reflecting long-term
historical returns, current market conditions and strategic asset allocation.
(I) The actual returns on plan assets for the years ended December 31, 2012 and 2011, are as follows:
(In millions of Korean won)
2012
2011
￦
Actual return on plan assets
88,701
￦
80,551
￦
68,375
(J) Plan assets as of December 31, 2012 and 2011, are comprised as follows:
(In millions of Korean won)
2012
Equity instruments
Debt instruments
Other
1
2011
￦
59,988
2,859,415
20,125
￦ 2,939,528
2,325,392
29,385
￦ 2,423,152
Plan assets are mostly invested in instruments which have a quoted price in active market.
(K) The analysis of the overall pension liability's sensitivity to changes in the weighted principal assumptions is
as follows :
(In millions of Korean won)
Discount rate
1% increases
1% decreases
Future salary increases
1% increases
1% decreases
Change in value
Rate of change
￦
4,201,001
5,235,704
90%
112%
￦
5,220,723
4,203,970
112%
90%
(L) Expected maturity analysis of undiscounted pension benefits as of December 31, 2012, is as follows:
(In millions of
Korean won)
Pension benefits
Less than 1 year
￦ 250,111
Between 1 and 2
years
Between 2 and 5
years
￦ 256,194
￦ 1,081,159
58
Between 5 and 10
years
￦ 2,957,385
Total
￦ 4,544,849
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. Provisions
The changes in the provisions during the year ended December 31, 2012, are as follows:
(In millions of Korean
won)
Warranty (A)
January 1, 2012
Increase
Decrease
Others1
December 31, 2012
1
Long-term
incentives (C)
Royalty expenses (B)
￦ 1,680,534
￦ 1,590,079
￦ 510,901
2,403,512
(1,970,017)
(81,212)
￦ 2,032,817
1,510,409
(174,702)
(152,590)
￦ 2,773,196
199,566
(134,138)
￦ 576,329
Others
Total
￦
96,245
￦ 3,877,759
(9,936)
(5,269)
￦ 81,040
4,103,551
(2,278,857)
(239,071)
￦ 5,463,382
Others include amounts from changes in foreign currency exchange rates.
(A) The Company accrues warranty reserves for estimated costs of future service, repairs and recalls, based on
historical experience and terms of warranty programs.
(B) The Company makes provisions for estimated royalty expenses related to technical assistance agreements
that have not been settled. The amount of payment depends on the settlement of the agreement.
(C) The Company has a long-term incentive plan for its executives based on a three-year management
performance criteria and has made a provision for the estimated incentive cost for the accrued period.
19. Commitments and Contingencies
(A) Guarantees
(In millions of Korean won)
Guarantees of debt for housing rental1
2012
￦
2011
151,817
￦
153,989
1
Represents the maximum amount of debt guarantee, which was provided for employees who took debt from financial institutions
in order to finance employee housing rental.
.
As of December 31, 2012, the Company’s investments in Pusan Newport are pledged as collateral against the
investee's debt (Note 9).
(B) Lease
As of December 31, 2012, details of lease contracts held by the Company are as follows:
Finance leases
The Company leases certain property, plant and equipment under various finance lease arrangements. Assets recorded
under finance lease agreements are included in property, plant and equipment with a net book value of ￦121,402
million (2011: ￦141,875 million). Depreciation expense for the finance lease assets amounted to ￦9,650 million for
the year ended December 31, 2012 (2011: ￦16,430 million).
59
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The minimum lease payments under finance lease agreements and their present value as of December 31, 2012 and
2011 are as follows:
2012
(In millions of Korean won)
Within one year
From one year to five years
More than five years
Total
Present value adjustment
Finance lease payables
Minimum Lease
payments
￦
21,399
70,310
108,865
￦ 200,574
2011
Present
values
Minimum Lease
payments
￦
13,293
40,216
61,555
￦ 115,064
(85,510)
￦ 115,064
￦
￦
25,968
81,970
131,263
239,201
￦
(102,347)
136,854
-
Present
values
￦
13,936
49,486
73,432
￦ 136,854
-
(C) Litigation
(1) Based on the agreement entered on August 24, 1999 with respect to Samsung Motor Inc.’s (“SMI”)
bankruptcy proceedings, Samsung Motor Inc.’s creditors (“the Creditors”) filed a civil action against Mr.
Kun Hee Lee, former chairman of the Company, and 28 Samsung Group affiliates including the
Company under joint and several liability for failing to comply with such agreement. Under the suit, the
Creditors have sought ￦2,450 billion (approximately $2.12 billion) for loss of principal on loans
extended to SMI, a separate amount for breach of the agreement, and an amount for default interest.
SLI completed its Initial Public Offering (“IPO”) on May 7, 2010. After disposing 2,277,787 shares and
paying the principal balance owed to the Creditors, ￦878 billion (approximately $0.76 billion) was
deposited in to an escrow account. That remaining balance was to be used to pay the Creditors interest
due to the delay in the SLI IPO. On January 11, 2011, the Seoul High Court ordered Samsung Group
affiliates to pay ￦600 billion (approximately $0.52 billion) to the Creditors and pay 5% annual interest
for the period between May 8, 2010 and January 11, 2011, and pay 20% annual interest for the period
after January 11, 2011 until the amounts owed to the Creditors are paid. In accordance with the Seoul
High Court order, ￦620.4 billion (which includes penalties and interest owed) was paid to the Creditors
from the funds held in escrow during January 2011. On February 7, 2011, the Samsung Group affiliates
and the Creditors appealed the Seoul High Court’ ruling to the Korean Supreme Court and the appeal is
currently in progress. The amount of loss related to this matter cannot be reasonably determined.
Accordingly, the Company has concluded that no provision for loss should be reflected in the
Company’s consolidated financial statements at December 31, 2012.
(2) The litigation with Apple Inc. in multiple regions including the U.S.A. and Germany is ongoing as of the
reporting date. Regarding the ongoing lawsuit in the U.S.A, on August 24, 2012, the jury determined that
the Company partially infringed Apple’s design and utility patent. The first appeal is still ongoing and
the final conclusion and the effect of the patent lawsuits with Apple are uncertain as of the reporting
date.
(3) In addition, during the normal course of business with numerous companies, the Company has been
involved in various claims, disputes, and investigations conducted by regulatory bodies. Although, the
outflow of resources and timing of these matters are uncertain, the Company believes the outcome will
not have a material impact on the financial condition of the Company
60
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(D) Other commitments
As of December 31, 2012, the Company has a trade financing agreement, trade notes receivable discounting facilities,
and loan facilities with accounts receivable pledged as collateral with 12 financial institutions, including Woori bank,
with a combined limit of up to ￦11,406,806 million. In addition, the Company has a trade financing agreement with
21 financial institutions, including Kookmin bank, for up to USD 5,134 million and ￦62,140 million, and has loan
facilities with accounts receivable pledged as collateral with 7 financial institutions, including Kookmin bank, for up
to ￦789,100 million.
Samsung Display has a facility loan agreement with 6 financial institutions including SMBC for up to ￦400,000
million and JPY 80,000 million, and has overdraft agreement with Woori bank for up to ￦10,000 million.
Two foreign subsidiaries including SEA have a contract for issuing ABS (Asset Backed Securities) backed by
accounts receivable with BTMU and other financial institutions for up to USD 1,361 million and other 5 subsidiaries
including SSL have a credit facility agreement with Bank of China and other financial institutions for up to CNY
1,540 million and EUR 30 million.
20. Share Capital and Premium
The Company’s number of authorized shares is 500,000,000 shares. The Company has issued 147,299,337 shares of
common stock and 22,833,427 shares of preferred stock as of December 31, 2012, excluding retired shares. Due to
retirement of shares, the total par value of the shares issued is ￦850,664 million (common stock ￦736,497 million,
preferred stock ￦114,167 million), which does not agree with paid-in capital of ￦897,514 million.
The changes in the number of shares outstanding as of December 31, 2012 and 2011, are as follows:
(In millions of Korean won and number of shares)
Number of shares of
Preferred
Common
stock1
stock2
Balance at December 31, 2010
Shares issued
Disposal of treasury stock
19,853,734
-
129,843,077
485,650
57,996
Balance at December 31, 2011
Shares issued
Disposal of treasury stock
19,853,734
-
130,386,723
191,309
269,867
Balance at December 31, 2012
19,853,734
130,847,899
Share capital
Share premium
Total
￦ 897,514
￦ 897,514
￦ 4,403,893
￦ 4,403,893
￦ 5,301,407
￦ 5,301,407
￦ 897,514
￦ 4,403,893
￦ 5,301,407
1
Non-cumulative, non-voting preferred stock with par value of ￦5,000 per share that were all issued on or before February 28,
1997 and are entitled to an additional cash dividend of 1% of par value over common stock.
2
Common stock with par value of ￦5,000 per share.
Issuance of shares
SEC is authorized, subject to the Board of Directors’ approval, to issue shares of common or preferred stock to
investors other than current shareholders for issuance of depository receipts, general public subscription, urgent
financing with financial institutions, and strategic alliance.
61
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SEC has issued global depositary receipts (“GDR”) to overseas capital markets. The number of outstanding GDR as
of December 31, 2012 and 2011, are as follows:
2012
Non-voting
Preferred Stock
Outstanding GDR
- Share of Stock
- Share of GDR
3,323,283
6,646,566
2011
Common
Stock
Non-voting
Preferred Stock
7,569,675
15,139,350
Common
Stock
3,092,581
6,185,162
7,316,976
14,633,952
21. Retained Earnings
Retained earnings as of December 31, 2012 and 2011, consist of the following:
(In millions of Korean won)
2012
￦
Appropriated
Unappropriated
2011
￦
87,915,275
32,070,414
￦
Total
78,713,318
18,909,554
￦
119,985,689
97,622,872
22. Dividends
SEC declared cash dividends to shareholders of common stock and preferred stock as interim dividends for the sixmonth periods ended June 30, 2012 and 2011 and as year-end dividends for the years ended December 31, 2012 and
2011.
Details of interim dividends and year-end dividends are as follows:
(A) Interim Dividends
(In millions of Korean won and number of shares)
Number of shares eligible for dividends
2012
Common stock
130,759,755 shares
130,148,288 shares
Preferred stock
19,853,734 shares
19,853,734 shares
10%
10%
Dividend rate
Dividend amount
2011
Common stock
￦
65,380
￦
75,307
Preferred stock
Total
62
￦
65,074
￦
75,001
9,927
9,927
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(B) Year-end Dividends
(In millions of Korean won and number of shares)
2012
2011
Number of shares eligible for dividends
Common stock
Preferred stock
130,847,899 shares
19,853,734 shares
130,386,723 shares
19,853,734 shares
Dividend rate
Common stock
Preferred stock
150%
151%
100%
101%
Dividend amount
Common stock
￦
981,359
￦
1,131,255
Preferred stock
￦
651,934
149,896
Total
100,261
￦
752,195
(C) Dividend Payout Ratio (Including interim dividends)
2012
Dividend payout ratio
2011
5.20%
6.18%
(D) Dividend Yield Ratio (Including interim dividends)
2012
Common Stock
Dividend yield ratio1
1
2011
Preferred Stock
0.54%
Common Stock
0.95%
Preferred Stock
0.52%
0.85%
The average closing price in the stock market for a week before 2 trading days prior to dividend date.
23. Other Components of Equity
Other components of equity as of December 31, 2012 and 2011, consist of the following:
(In millions of Korean won)
2012
￦ (7,539,561)
22,242
2,001,536
55,313
1,040,849
Share of associates and joint ventures accumulated other comprehensive gains
Foreign-currency translation differences
720,944
(2,623,963)
1,071,435
(834,086)
Remeasurement impact of employee benefit
Others
(1,097,228)
134,352
(590,877)
963,031
￦ (8,193,044)
￦ (5,833,896)
Treasury stock
Stock option
Unrealized gains on available-for-sale financial assets
Total
1
2011
￦ (7,350,927)
1
As of December 31, 2012, the Company holds 16,451,438 common shares and 2,979,693 preferred shares as treasury stock.
2012
(In millions of Korean won
and number of shares)
Number of shares
Acquisition cost
Preferred Stock
2,979,693 shares
￦ 621,843
2011
Common Stock
16,451,438 shares
￦ 6,729,084
63
Preferred Stock
2,979,693 shares
￦ 621,843
Common Stock
16,912,614 shares
￦ 6,917,718
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. Share Based Compensation
The Company has a stock option plan that provides for the granting of stock purchase options to employees or
directors who have contributed or are expected to contribute to the management and technological innovation of the
Company. No share based compensation has been granted since December 20, 2005. All options currently in issue are
fully vested.
A summary of the terms and the number of outstanding stock options as of December 31, 2012 is as follows:
March 9,
2001
At January 1, 2011
Exercised during 2011
At December 31, 2011
Exercised During 2012
At December 31, 2012
Exercise price
Weighted average share price at the
date of exercise during 2011
Weighted average share price at the
date of exercise during 2012
Exercise period from the date of the
grant
Date of the Grant
March 25,
March 7,
2002
2003
February 28,
2002
176,072
176,072
-
160,221
112,626
47,595
47,595
-
30,975
28,046
2,929
2,929
-
April 16,
2004
74,875
25,624
49,251
33,404
15,847
December 20,
2005
344,568
143,282
201,286
102,381
98,905
10,000
10,000
5,000
5,000
￦ 197,100 ￦
329,200 ￦
342,800 ￦
288,800 ￦
580,300 ￦
606,700
￦ 943,994 ￦
949,456 ￦
931,977 ￦
935,942 ￦
998,175 ￦
-
￦
- ￦ 1,102,409 ￦ 1,154,394 ￦ 1,308,176 ￦ 1,276,208 ￦ 1,404,000
3-10years
2-10years
2-10years
2-10years
2-10years
2-10years
25. Expenses by Nature
Expenses by nature for the years ended December 31, 2012 and 2011 consist of the following:
(In millions of Korean won)
2012
2011
Raw materials and goods
Wages and salaries
Pension expenses
Depreciation expenses
Amortization expenses
Welfare expenses
Commission and service charges
Other expenses
￦
85,193,865
Total1
￦
13,629,400
768,423
14,835,046
786,970
2,481,756
6,961,701
47,397,114
172,054,275
1
￦
75,329,188
￦
11,906,674
584,096
12,934,274
657,790
1,998,559
5,936,770
40,010,129
149,357,480
Expenses above equal to the sum of cost of sales, selling, general and administrative expenses in the Statements of Income.
64
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. Selling and Administrative Expenses
Selling and administrative expenses for the years ended December 31, 2012 and 2011, are as follows:
(In millions of Korean won)
2012
2011
￦
4,032,848
￦
204,929
6,961,701
442,080
353,909
4,887,089
6,055,105
3,794,950
3,247,757
627,901
11,532,795
3,261,280
45,402,344
Wages and salaries
Pension expenses
Commission and service charges
Depreciation expenses
Amortization expenses
Advertising expenses
Sales promotion expenses
Transportation expenses
Warranty
Public relation expenses
Research and development expenses
Others
￦
3,551,588
￦
140,587
5,936,770
368,123
300,497
2,982,270
4,649,293
3,789,476
2,805,696
523,149
9,955,164
2,209,747
37,212,360
27. Other Non-Operating Income and Expense
Other non-operating income for the years ended December 31, 2012 and 2011, consists of the following:
(In millions of Korean won)
2012
￦
Dividend income
Commission income
Rental income
Gain on disposal of investments
Gain on disposal of property, plant and equipment
Gain on disposal of business1
Others
￦
1
106,181
100,535
98,462
113,886
147,645
986,280
1,552,989
2011
￦
￦
34,423
26,313
92,155
223,535
113,690
1,062,793
698,110
2,251,019
Gain on disposal of business in 2011 relates to sales of the Solar battery business and the HDD business.
Other non-operating expense for the years ended December 31, 2012 and 2011, consists of the following:
(In millions of Korean won)
2012
￦
Loss from disposal of property, plant and equipment
Donations
Impairment losses on intangible assets
Impairment losses on property, plant and equipment
Impairment losses on available-for-sale financial assets
Others
￦
65
324,993
235,349
216,790
215,325
87,515
496,053
1,576,025
2011
￦
￦
109,338
272,275
186,759
97,517
39
946,762
1,612,690
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
28. Financial Income and Costs
Financial income and costs for the years ended December 31, 2012 and 2011 are as follows:
(In millions of Korean won)
2012
Finance income
Interest income
Interest income from loans and receivables
Interest income from available-for-sale financial assets
Foreign exchange differences
Gains on valuation of derivatives
Gains on derivatives transaction
2011
￦
￦
845,431
840,150
5,281
6,452,612
27,719
510,792
￦ 7,836,554
(In millions of Korean won)
705,653
702,198
3,455
6,120,748
80,103
497,021
￦ 7,403,525
2012
Finance expense
Interest expense:
Interest expense from financial liabilities measured at amortized cost
Other financial liabilities
Foreign exchange differences
Losses on valuation of derivatives
Losses on derivatives transaction
2011
￦
￦
599,006
277,512
321,494
6,596,524
124,344
614,576
￦ 7,934,450
644,133
270,929
373,204
6,785,565
59,697
404,026
￦ 7,893,421
The Company recognizes foreign exchange gains and losses arising from foreign currency transactions and translation
as financial income and expenses.
29. Income Tax
(A) Income tax expense for the years ended December 31, 2012 and 2011, consists of the following:
(In millions of Korean won)
2012
Current taxes :
Current tax on profits for the year
Adjustments in respect of prior years
￦
Deferred taxes :
Deferred income taxes - tax credit
Deferred income taxes - temporary difference
Deferred income taxes - accumulated operating loss
Others
Items charged directly to equity
￦
Income tax expense
66
2011
5,656,298
95,296
5,751,594
￦ 3,051,406
95,670
3,147,076
235,640
19,885
(850)
60,654
2,809
6,069,732
(75,311)
381,715
(22,599)
1,994
￦ 3,432,875
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(B) The tax on the Company’s profit before tax differs from the theoretical amount that would arise using the
weighted average tax rate applicable to profits of the Company as follows:
(In millions of Korean won)
2012
Income before tax
Tax calculated at weighted average tax rates applicable1
Tax effects of:
Permanent difference
Temporary differences for which no deferred income tax was recognized
Tax credit
Subsidiaries, associates and interests in joint ventures
Impact of changes in tax rates
Other
Income tax expense
Effective tax rate
1
2011
￦ 29,915,017
7,664,722
￦ 17,191,918
4,354,162
(161,762)
(7,930)
(1,980,710)
650,000
(3,602)
(90,986)
(393,004)
7,309
(1,633,452)
906,505
140,181
51,174
￦ 6,069,732
￦ 3,432,875
20.29%
19.97%
Weighted average statutory tax rates that are applied differently for the profits of the Company at each tax authority as of
December 31, 2012 and 2011.
67
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(C) Deferred income tax assets and liabilities resulting from the tax effect of temporary differences including
available tax credit carryforwards and undisposed accumulated deficit as of December 31, 2012, are as
follows:
(In millions of Korean won)
Beginning
Balance
Temporary Differences
Increase
Ending
(Decrease)
Balance
Deferred tax arising from temporary differences
Special reserves appropriated
￦ (18,146)
for tax purposes
(4,017,316)
Revaluation of land
Subsidiaries, associates
(13,450,537)
and interests in joint ventures
26,975
Depreciation
(40,522)
Capitalized interest expense
(92,953)
Accrued income
7,144,431
Provisions, accrued expenses and others
150,908
Foreign currency translation
52,901
Impairment losses on investments
779,626
Others
Subtotal
￦(9,464,633)
Deferred tax assets arising from carryforwards
￦ 100,401
Undisposed accumulated deficit
1,512,052
Tax credit carryforwards
Deferred items recognized in other comprehensive income
Valuation of available-for-sale financial
￦ (1,316,863)
instruments
Actuarial valuation
813,514
￦ (503,349)
Subtotal
Deferred Income Tax Assets (Liabilities)
Beginning
Increase
Ending
Balance
(Decrease)
Balance
￦ (14,951)
￦ (33,097)
￦ (4,391)
￦ (3,619)
￦ (8,010)
539,625
(3,477,691)
(972,191)
130,590
(841,601)
(11,813,329)
(25,263,866)
(3,032,268)
(650,000)
(3,682,268)
1,229,250
21,690
(31,224)
3,217,777
(164,168)
37,755
(1,673,860)
1,256,225
(18,832)
(124,177)
10,362,208
(13,260)
90,656
(894,234)
(52,318)
(9,806)
(21,337)
1,806,514
35,482
10,937
288,217
250,219
5,249
(6,826)
750,331
(41,449)
5,587
(459,967)
197,901
(4,557)
(28,163)
2,556,845
(5,967)
16,524
(171,750)
￦(8,651,435)
￦(18,116,068)
￦(1,951,161)
￦ (19,885)
￦ (1,971,046)
￦
￦
130,992
1,316,509
￦ 26,961
1,495,747
￦
850
(235,640)
￦(2,581,628)
1,471,318
￦(1,110,310)
￦ (318,052)
196,149
￦ (121,903)
￦(262,040)
153,684
￦(108,356)
30,591
(195,543)
￦(1,264,765)
657,804
￦ (606,961)
￦
27,811
1,260,107
￦ (580,092)
349,833
￦ (230,259)
Deferred tax assets
Deferred tax liabilities
￦ 2,516,080
Total
￦ (913,387)
(3,429,467)
68
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Deferred income tax assets and liabilities resulting from the tax effect of temporary differences including available tax
credit carryforwards and undisposed accumulated deficit as of December 31, 2011, are as follows:
(In millions of Korean won)
Beginning
Balance
Temporary Differences
Increase
Ending
(Decrease)
Balance
Deferred tax arising from temporary differences
Special reserves appropriated
￦ (18,146)
for tax purposes
(3,984,173)
Revaluation of land
Subsidiaries, associates
(14,160,207)
and interests in joint ventures
130,396
Depreciation
(39,867)
Capitalized interest expense
(144,621)
Accrued income
3,742,343
Provisions, accrued expenses and others
(23,022)
Foreign currency translation
45,420
Impairment losses on investments
1,970,813
Others
-
￦ (18,146)
￦ (3,992)
￦ (399)
￦ (4,391)
(33,143)
(4,017,316)
(876,518)
(95,673)
(972,191)
709,670
(13,450,537)
(2,109,299)
(922,969)
(3,032,268)
(103,421)
(655)
51,668
3,402,088
173,930
7,481
(1,191,187)
26,975
(40,522)
(92,953)
7,144,431
150,908
52,901
779,626
(9,325)
(8,810)
(34,930)
926,713
(6,568)
9,994
565,168
(42,993)
(996)
13,593
879,801
42,050
943
(276,951)
(52,318)
(9,806)
(21,337)
1,806,514
35,482
10,937
288,217
￦(12,481,064)
￦3,016,431
￦(9,464,633)
￦(1,547,567)
￦(403,594)
￦ (1,951,161)
Deferred tax assets arising from carryforwards
￦ 40,822
Undisposed accumulated deficit
1,581,825
Tax credit carryforwards
￦ 59,579
(69,773)
￦ 100,401
1,512,052
￦
4,362
1,420,436
￦ 22,599
75,311
￦ 26,961
1,495,747
￦ 957,608
￦(1,316,863)
￦ (424,121)
￦ 106,069
￦ (318,052)
196,149
(121,903)
Deferred items recognized in other comprehensive income
Valuation of available-for-sale financial
￦(2,274,471)
instruments
304,586
Actuarial valuation
Total
(1,969,885)
￦
Deferred Income Tax Asset (Liabilities)
Beginning
Increase
Ending
Balance
(Decrease)
Balance
508,928
813,514
72,435
123,714
1,466,536
(503,349)
(351,686)
229,783
Deferred tax assets
Deferred tax liabilities
￦ 1,783,086
Total
￦ (550,356)
(2,333,442)
The Company periodically assesses its ability to recover deferred income tax assets. In the event of a significant
uncertainty regarding the Company's ultimate ability to recover such assets, deferred income tax assets are recognized
only to the extent that it is probable that future taxable profit will be available against which the temporary differences
can be utilized.
Temporary differences whose deferred tax effects were not recognized due to the uncertainty regarding ultimate
realizability of such assets as of December 31, 2012 and 2011 are as follows:
(In millions of Korean won)
2012
2011
￦
Undisposed accumulated deficit
Tax credit carryforwards
69
48,262
￦
144,108
159,160
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Expiry date of unused tax losses and unused tax credits for which no deferred tax asset is recognized in the balance
sheet are as follows:
(In millions of Korean won)
Tax credit carryforwards
2013
￦ 1,103
2014
2015
￦ 3,455
￦ 22,313
2016 and after
￦ 21,391
(D) The amount of income tax relating to each component of other comprehensive income is as follows:
(In millions of Korean won)
2012
2011
Valuation of available-for-sale financial assets
Foreign currency translation adjustment
Actuarial valuation
￦ (580,092)
￦
(340,760)
￦
22,708
196,149
(121,903)
349,833
￦ (230,259)
Total
(E) The liquidity analysis of deferred tax assets and deferred tax liabilities is as follows:
(In millions of Korean won)
2012
2011
￦ 1,898,481
Current
Non-current
￦
(2,811,868)
￦ (913,387)
Total
2,869,404
(3,419,760)
￦
(550,356)
30. Earnings per Share
Basic earnings per share for the years ended December 31, 2012 and 2011, are calculated as follows:
(In millions of Korean won, except for share amounts)
2012
2011
Net income as reported on the statements of income
Net income available for common stock
Weighted-average number of common shares outstanding (in thousands)
￦ 23,185,375
20,130,020
130,698
￦ 13,382,645
11,613,300
130,152
Basic earnings per share (in Korean won)
￦
￦
(In millions of Korean won, except for share amounts)
154,020
2012
89,229
2011
Net income as reported on the statements of income
Net income available for preferred stock
Weighted-average number of preferred shares outstanding (in thousands)
￦ 23,185,375
3,055,355
19,854
￦ 13,382,645
1,769,345
19,854
Basic earnings per preferred share (in Korean won)
￦
￦
153,893
89,119
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to
assume conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential
ordinary shares: Stock options. A calculation is done to determine the number of shares that could have been acquired
at fair value (determined as the average annual market share price of the Company’s shares) based on the monetary
value of the subscription rights attached to outstanding share options. The number of shares calculated as above is
compared with the number of shares that would have been issued assuming the exercise of the share options.
70
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Diluted earnings per share for the years ended December 31, 2012 and 2011 are calculated as follows:
(In millions of Korean won, except for share amounts)
2012
2011
Net income available for common stock and common equivalent shares
Weighted-average number of shares of common stock and common
shares equivalent (in thousands)
￦ 20,131,405
￦ 11,614,952
130,766
130,292
Diluted earnings per share (in Korean won)
￦
(In millions of Korean won, except for share amounts)
153,950
2012
Net income available for preferred stock and preferred equivalent shares
Weighted-average number of shares of preferred stock and preferred
shares equivalent (in thousands)
￦
Diluted earnings per preferred share (in Korean won)
￦
71
￦
89,146
2011
3,053,970
￦
19,854
153,823
1,767,693
19,854
￦
89,036
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31. Cash Generated from Operations
(A) Cash flows from operating activities as of December 31, 2012 and 2011, consist of the following:
(In millions of Korean won)
2012
2011
Adjustments for:
Tax expense
Finance income
Finance expense
Severance and retirement benefits
Depreciation expenses
Amortization expenses
Bad debt expenses and etc.
Gain on valuation of equity method
Gain on disposal of property, plant and equipment
Loss on disposal of property, plant and equipment
Obsolescence and scrappage of inventories
Gain on disposal of investments
Gain on transfer of business
Impairment losses on intangible assets
Other income/expense
Adjustments, total
(In millions of Korean won)
￦ 6,069,732
(2,068,888)
1,755,715
768,423
14,835,046
786,970
205,424
(986,611)
(147,645)
324,993
1,212,222
(113,886)
216,790
(98,726)
￦ 3,432,875
(1,821,379)
1,661,180
584,096
12,934,274
657,790
93,801
(1,399,194)
(113,690)
109,338
1,353,320
(223,535)
(1,062,793)
186,759
57,787
￦ 22,759,559
￦ 16,450,629
2012
2011
Changes in assets and liabilities:
Increase in trade receivables
Increase in other receivables
Increase in advance payment
Increase in prepaid expenses
Increase in inventories
Increase in trade payables
Increase in other payables
Increase in advance received
(Decrease)/Increase in withholdings
Increase in accrued expenses
Increase in utilization of provisions
Payment of severance benefits
Increase in plan assets
Others
￦ (2,032,126)
(536,202)
(277,329)
(72,285)
(4,011,553)
(465,450)
(416,870)
88,152
(663,733)
2,183,846
1,824,693
(301,444)
(440,420)
(657,228)
￦ (2,015,177)
(181,613)
(147,387)
(27,432)
(3,919,683)
750,048
375,478
548,416
556,563
508,657
722,421
(256,261)
(531,743)
(439,632)
Changes in net working capital, total
￦ (5,777,949)
￦ (4,057,345)
72
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(B) Significant transactions not affecting cash flows for the years ended, 2012 and 2011, are as follows:
(In millions of Korean won)
2012
2011
Valuation of available-for-sale financial assets
Reclassification of construction-in-progress and machinery-in-transit
to property, plant and equipment
Increase in share of associates and joint ventures accumulated other
comprehensive income
Net assets acquired from business combination
Net assets acquired in transfer of business
￦ 1,185,256
￦ (559,831)
19,567,010
22,530,787
(350,491)
(113,898)
(633,708)
-
788,454
(C) The Company reported on a net basis cash receipts and payments arising from transactions occurring
frequently and short-term financial instruments, loans, and borrowings.
(D) Among the net cash used in investing activities, cash outflows from business combination include the
acquisition of assets and liabilities of CSR.
32. Financial Risk Management
Financial risk factors
The Company is exposed to credit risk, liquidity risk and market risk. Market risk arises from currency risk, interest
rate risk and fair value risk associated with investments. The Company has a risk management program in place to
monitor and actively manage such risks.
Also, financial risk management officers are dispatched to the regional head quarters of each area including US, UK,
Singapore, China, Japan, Brazil and Russia to run and operate a local financial center for global financial risk
management.
The Company’s financial assets that are under financial risk management are composed of cash and cash equivalents,
short-term financial instruments, available-for-sale financial assets, trade and other receivables and other financial
assets. The Company’s financial liabilities under financial risk management are composed of trade and other payables,
borrowings and debentures, and other financial liabilities.
(A) Market risk
(1) Foreign exchange risk
The Company is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to
the United States of America, European Union, Japan, other Asian countries and South America. Revenues and
expenses arise from foreign currency transactions and exchange positions, and the most widely used currencies are the
US Dollar, EU’s EURO, Japanese Yen and Chinese Yuan. Foreign exchange risk management of the Company is
carried out by both SEC and its subsidiaries. To minimize foreign exchange risk arising from operating activities, the
Company’s foreign exchange management policy requires all normal business transactions to be in local currency, or
cash-in currency be matched up with cash-out currency. The Company’s foreign risk management policy also defines
foreign exchange risk, measuring period, controlling responsibilities, management procedures, hedging period and
hedge ratio very specifically.
The Company limits all speculative foreign exchange transactions and operates a system to manage receivables and
payables denominated in foreign currency. It evaluates, manages and reports foreign currency exposures to
receivables and payables.
73
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A summary of foreign assets and liabilities of the Company, presented in Korean won, as of December 31, 2012 and
2011 is as follows:
(In millions of
Korean won)
Financial
Assets
Financial
Liabilities
2012
2011
USD
EUR
JPY
Other
USD
EUR
JPY
Other
￦ 12,709,235
￦ 1,085,390
￦ 178,373
￦ 1,577,076
￦ 12,310,076
￦ 660,482
￦ 568,204
￦ 1,288,309
9,550,081
978,953
1,142,081
214,639
11,092,528
524,075
1,064,553
197,362
Foreign currency exposure to financial assets and liabilities of a 5% currency rate change against the Korean won are
presented below.
(In millions of Korean won)
2012
Increase
Financial assets
Financial liabilities
Net effect
2011
Decrease
₩ 777,504
(594,288)
183,216
₩ (777,504)
594,288
(183,216)
Increase
Decrease
₩ 741,354
(643,926)
97,428
₩ (741,354)
643,926
(97,428)
(2) Price risk
The Company’s investment portfolio consists of direct and indirect investments in equity securities classified as
available-for-sale. The market values for the Company’s equity investments for the year-ended December 31, 2012
and 2011 are ₩5,103,181 million and ₩3,149,926 million, respectively. Refer to Note 9.
If there is a change in the price of equity investments by 1%, the amount of other comprehensive income changes for
the year-ended December 31, 2012 and 2011 would be ₩44,359 million and ₩25,262 million, respectively.
(3) Interest rate risk
Interest rate risk is defined as the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. The Company is exposed to interest rate risk mainly arising through
interest bearing liabilities and assets. The Company’s position with regard to interest rate risk exposure is mainly
driven by its debt obligations such as bonds, interest-bearing deposits and issuance of receivables. In order to avoid
interest rate risk, the Company maintains minimum external borrowing by facilitating cash pooling systems on a
regional and global basis. The Company manages exposed interest rate risk via periodic monitoring and handles risk
factors on a timely basis.
As of the reporting date, the interest rate profile of the Company’s interest bearing assets and liabilities is presented in
the table below:
(In millions of Korean won)
2012
Fixed rate
Financial assets
Financial liabilities
￦ 59,351,335
40,632,972
2011
Floating rate
￦ 7,816,434
2,186,448
74
Fixed rate
￦ 50,476,935
41,129,584
Floating rate
￦ 2,838,767
880,702
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The sensitivity risk of the Company is determined based on the following assumptions:
- Changes in market interest rates that could impact the interest income and expenses of floating interest rate financial
instruments
Based on the above assumption, changes to profit and net equity as a result of 1% increases in interest rate on
borrowings are presented below:
(In millions of Korean won)
2012
2011
Increase
Financial assets
Financial liabilities
Decrease
￦
￦ (78,164)
21,864
￦ (56,300)
78,164
(21,864)
￦ 56,300
Increase
￦ 28,388
(8,807)
￦ 19,581
Decrease
￦ (28,388)
8,807
￦ (19,581)
(B) Credit risk
Credit risk arises during the normal course of transactions and investing activities, where clients or another party fails
to discharge an obligation. The Company monitors and sets the counterparty’s credit limit on a periodic basis based on
the counterparty’s financial conditions, default history and other important factors.
Credit risk arises from cash and cash equivalents, savings and derivative instruments transactions with financial
institutions. To minimize such risk, the Company transacts only with banks which have strong international credit
rating (S&P A above), and all new transactions with financial institutions with no prior transaction history are
approved, managed and monitored by the Company’s finance team and the local financial center. The Company
requires separate approval for contracts with restrictions.
Therefore, the Company estimates credit risk exposure to itself as limited and the carrying value of financial assets
represents net of impairment loss to reflect the Company’s maximum exposure to the credit risk.
The top five customers account for approximately 12.9% and 12.9% and ₩3,074,791 million and ₩2,831,801
million of accounts receivables for the year ended 2012 and 2011, respectively, while the top three credit exposures by
country amounted to 18.2%, 13.8% and 9.4% (December 31, 2011:16.0%, 14.7% and 10.4%).
(C) Liquidity risk
The Company manages its liquidity risk to maintain adequate net working capital by constantly managing projected
cash flows. Beyond effective working capital and cash management, the Company mitigates liquidity risk by
contracting with financial institutions with respect to bank overdrafts, Cash Pooling or Banking Facility agreements
for efficient management of funds. The Cash Pooling programs allow sharing of funds among subsidiaries to
minimize liquidity risk and reduce financial expense.
75
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table is an undiscounted cash flow analysis for financial liabilities that are presented on the balance
sheet according to their remaining contractual maturity.
2012
(In millions of Korean won)
Less than
3 months
Financial liabilities
￦ 32,257,940
4-6
months
￦ 1,690,825
7-12
months
￦ 2,371,879
1-5
years
More than
5 years
￦ 7,006,975
￦ 76,236
2011
(In millions of Korean won)
Less than
3 months
Financial liabilities
￦ 31,045,236
4-6
months
￦ 1,134,966
7-12
months
￦ 3,951,111
1-5
years
More than
5 years
￦ 6,467,585
￦ 92,737
The Company’s trading portfolio derivative instruments have been included at their fair value of ₩79,212 million
(2011: ₩40,932 million) within the less than three month time bucket because the contractual maturities are not
essential for an understanding of the timing of the cash flows. These contracts are managed on a net-fair value basis
rather than by maturity date. Net settled derivatives consist of forward exchange contracts used by the Company to
manage the exchange rate profile.
The maximum liquidity risk exposure from other than financial liabilities (e.g. debt guarantee with rental housing) at
December 31, 2012 is ₩151,817 million (December 31, 2011: ₩153,989 million)
(D) Capital risk management
The object of capital management is to maintain a sound capital structure. Consistent with others in the industry, the
Company monitors capital on the basis of a total liabilities to equity ratio. This ratio is calculated as total liabilities
divided by equity based on the consolidated financial statements.
During 2012, the Company’s strategy was to maintain a reliable credit rating. The Company has maintained an A
credit rating from S&P and A1 from Moody’s throughout the period. The gearing ratios at 31 December 2012 and
2011 were as follows:
(In millions of Korean won)
2012
￦ 59,591,364
121,480,206
49.1%
Total liabilities
Total equity
Gearing ratio
76
2011
￦ 54,486,633
101,313,630
53.8%
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(E) Fair value estimation
(1) The following table presents the assets and liabilities that are measured by fair value hierarchy, by level.
2012
(In millions of Korean won)
Derivatives
Level 1
￦
Level 2
-
￦ 47,227
Available-for-sale financial assets
5,694,730
Total assets
￦ 47,227
125,994
389,195
6,209,919
5,694,730
173,221
389,195
6,257,146
-
79,212
-
79,212
-
￦ 79,212
-
￦ 79,212
￦
￦
Total balance
-
Derivatives
Total liabilities
Level 3
￦
2011
(In millions of Korean won)
Derivatives
Level 1
￦
Level 2
-
￦ 130,057
Available-for-sale financial assets
3,182,156
Total assets
Derivatives
Total liabilities
￦
Level 3
￦
Total balance
-
￦ 130,057
73,672
623,739
3,879,567
3,182,156
203,729
623,739
4,009,624
-
40,932
-
40,932
-
￦ 40,932
-
￦ 40,932
￦
The levels of the fair value hierarchy and its application to financial assets and liabilities are described below.
ㆍLevel 1 : Quoted prices (unadjusted) in active markets for identical assets or liabilities
ㆍLevel 2 : Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly or indirectly
ㆍLevel 3 : Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet
date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer,
broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring
market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Company
is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise
exclusively of listed equity investments classified as trading securities or available-for-sale.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter
derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of observable
market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
77
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Specific valuation techniques used to value financial instruments include:
ㆍQuoted market prices or dealer quotes for similar instruments.
ㆍThe fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance
sheet date, with the resulting value discounted back to present value.
Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial
instruments. As for trade and other receivables, the book value approximates a reasonable estimate of fair value.
(2) Changes in Level 3 instruments:
2012
(In millions of Korean won)
2011
￦ 623,739
￦ 326,359
Purchases
82,508
397,865
Disposals
(31,972)
(97,390)
(6,294)
69,004
(278,786)
(72,099)
￦ 389,195
￦ 623,739
Opening balance
Gains and losses recognized in
other comprehensive income
1
Others
Closing balance
1
CSOT equity securities, which are non-marketable securities, are measured at cost as the range of reasonable fair value estimates
is significant and the probabilities of the various estimates cannot be reasonably assessed.
33. Segment Information
The chief operating decision maker has been identified as the Management Committee. The Management Committee
is responsible for making strategic decisions based on review of the group’s internal reporting. The Management
Committee has determined the operating segments based on these reports.
The Management Committee reviews operating profits of each operating segment in order to assess performance and
make decisions about resources to be allocated to the segment.
The operating segments are product based and include CE, IM, Semiconductor and LCD. In accordance with the
changes of the Accounting Policies (Note 2) to provide consistent presentation, operating segment information of the
previous year has been re-written to match with organizational changes made in 2012.
Depreciation, amortization of intangible assets, and operating profit were prepared after the allocation of internal
transaction adjustments. Assets and liabilities of each operating segment are excluded as it has not been provided
regularly to the Management Committee.
78
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The segment information provided to the Management committee for the reportable segments for the year ended 31
December 2012 and 2011 is as follows:
2012
(In millions of
Korean won)
DMC
Total1
Total segment
Revenue
Inter-segment
Revenue
Revenue from
external
customers
Depreciation
Amortization
Operating
profit(loss)
2011
(In millions of
Korean won)
Total segment
Revenue
Inter-segment
Revenue
Revenue from
external
customers
Depreciation
Amortization
Operating
profit(loss)
1
CE
IM
DS
Semi
conductor
Total1
Consolidated
LCD
Total1
479,499,910 (278,396,297)
Elimination
347,393,209
111,397,867
231,420,085
136,724,256
66,976,623
69,359,762
(189,065,192)
(62,954,118)
(122,914,049)
(68,436,962)
(32,090,017)
(36,360,406)
(278,396,297)
278,396,297
-
158,328,017
1,371,373
376,956
48,443,749
565,310
70,370
108,506,036
497,607
188,740
68,287,294
13,354,303
274,568
34,886,606
9,087,880
186,497
32,999,356
4,179,088
77,047
201,103,613
14,835,046
786,970
-
201,103,613
14,835,046
786,970
21,612,818
2,301,431
19,440,840
7,416,325
4,173,730
3,214,750
29,049,338
-
29,049,338
DMC
Total1
CE
IM
DS
Semi
conductor
Total1
201,103,613
Consolidated
LCD
Total1
378,693,504 (213,691,733)
Elimination
249,807,647
103,530,319
142,127,410
132,790,577
71,305,465
61,648,667
165,001,771
(133,588,287)
(56,233,694)
(74,679,457)
(67,015,926)
(34,315,914)
(32,405,595)
(213,691,733)
213,691,733
-
116,219,360
1,194,509
244,284
47,296,625
589,010
57,207
67,447,953
356,902
158,394
65,774,651
11,732,649
213,002
36,989,551
7,678,022
143,810
29,243,072
4,027,032
61,943
165,001,771
12,934,274
657,790
-
165,001,771
12,934,274
657,790
9,523,446
1,256,788
8,122,626
6,062,934
6,383,875
(347,114)
15,644,291
-
15,644,291
The total amount includes others not composing operating segments.
The regional segment information provided to the Management Committee for the reportable segments for the years
ended 31 December 2012 and 2011, is as follows:
2012
(In millions of
Korean won)
Total segment Revenue
Inter-segment Revenue
Revenue from
external
customers
Non-current
assets1
1
Korea
America
Europe
Asia and
Africa
China
Eliminations
Consolidated
179,434,349
81,440,718
75,448,403
57,246,033
85,930,407
(278,396,297)
201,103,613
(150,254,258)
(23,277,536)
(25,927,742)
(21,167,278)
(57,769,483)
278,396,297
-
29,180,091
58,163,182
49,520,661
36,078,755
28,160,924
-
201,103,613
60,591,343
6,890,648
1,030,437
1,749,330
2,574,796
(622,106)
72,214,448
The total of non-current assets other than financial instruments, deferred tax assets, associates, and interests in joint ventures.
79
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2011
(In millions of
Korean won)
Total segment Revenue
Inter-segment Revenue
Revenue from
external
customers
Non-current
assets1
1
Korea
America
Europe
Asia and
Africa
China
Eliminations
Consolidated
143,717,714
67,967,462
63,096,978
41,853,227
62,058,123
(213,691,733)
165,001,771
(117,185,100)
(20,441,236)
(24,028,163)
(13,035,182)
(39,002,052)
213,691,733
-
26,532,614
47,526,226
39,068,815
28,818,045
23,056,071
-
165,001,771
53,864,391
7,157,372
943,800
1,333,012
2,229,989
(129,377)
65,399,187
The total of non-current assets other than financial instruments, deferred tax assets, associates, and interests in joint ventures.
34. Related Parties
(A) Associates
The principal associate companies are Samsung SDI, Samsung Electro-mechanics, Samsung SDS, Samsung Techwin
and Samsung card.
Transactions with associates for the years ended December 31, 2012 and 2011 and the related receivables and
payables as of December 31, 2012 and 2011, are as follows:
(In millions of Korean won)
2012
Transactions
Sales
Purchases
Receivables and Payables
Receivables
Payables
2011
￦ 806,658
9,710,610
￦ 1,695,298
8,634,597
85,701
955,349
225,076
1,168,952
(B) Joint ventures
The principal joint venture company is Samsung Corning Precision Materials as of December 31, 2012.
Transactions with joint venture partners for the years ended December 31, 2012 and 2011, and the related receivables
and payables as of December 31, 2012 and 2011, are as follows:
(In millions of Korean won)
2012
Transactions
Sales
Purchases
Receivables and Payables
Receivables
Payables
80
2011
￦ 35,484
2,800,989
￦ 7,195
3,210,831
878
408,885
6,379
379,944
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(C) Other related parties
Samsung Everland and other companies are defined as related parties for the Company as of December 31, 2012
Transactions with other related parties for the years ended December 31, 2012 and 2011, and the related receivables
and payables as of December 31, 2012 and 2011, are as follows:
(In millions of Korean won)
2012
Transactions
Sales
Purchases
Receivables and Payables
Receivables
Payables
￦
2011
￦
109,228
752,170
189,840
179,646
85,907
655,062
244,411
172,872
(D) Key management compensation
Key management includes directors (executive and non-executive) and members of the Executive Committee. The
compensation paid or payable to key management for employee services is shown below:
(In millions of Korean won)
2012
￦
Salaries and other short-term benefits
Termination benefits
Other long-term benefits
2011
￦
10,062
530
5,865
15,808
696
5,096
35. Significant Changes of Non-Controlling Interests
(A) Acquisition of non-controlling interests in 2012 are as follows:
(In millions of Korean won)
Date of acquisition
S-LCD
Samsung Japan
Samsung Asia Private
January 19, 2012
April 27, 2012
April 27, 2012
50%
49%
30%
100%
100%
100%
Consideration paid to non-controlling interests
1,067,082
159,278
19,452
Carrying amount of non-controlling interests acquired
1,764,927
60,667
13,313
697,845
(98,611)
(6,139)
Acquired percentage of non-controlling interests
Ownership share after transaction
Capital Surplus1
1
The difference between the carrying amount of non-controlling interests at the time of transaction and consideration paid has been
accounted for as capital surplus which belongs to the owner of consolidated company.
(B) In 2012 Samsung Display Corporation, the subsidiary, merged other subsidiaries, Samsung Mobile Display
and S-LCD. This transaction resulted in the reduced percentage of ownership of the Company of Samsung
Display from 100% to 84.8% and increased non-controlling interests by ￦1,654,645 million, which was
recognized as the decrease of the equity to the owner of consolidated company (Refer to Note 37 for further
details).
81
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
36. Business Combinations
(A) Samsung LED
The Company acquired Samsung LED with a closing date of April 1, 2012 to improve shareholder value through the
enhancement of business efficiency and maximization of business synergies. The approval of the Board of Directors
of the Company replaces shareholders’ meeting approval of the acquisition, as the acquisition of Samsung LED is a
small and simple merger as defined in the commercial law.
(1) Overview of the acquired company
Name of the acquired company
Samsung LED
Headquarters location
Giheung-gu, Yongin-si, Gyeonggi-do
Representative director
Classification of the acquired company
Nam-seong Cho
Unlisted company
Former relationship with the Company
Associates
(2) Terms of the business combination
The shareholders of Samsung LED received 0.0134934 shares of the Company’s common stock for each share of
Samsung LED common stock owned on the closing date. The Company transferred its treasury stock to the
shareholders of Samsung LED, instead of issuing new stock.
82
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(3) Purchase price allocation
The following table summarizes the consideration paid for Samsung LED and the amounts of the assets acquired and
liabilities assumed as of the acquisition date.
Amount
(In millions of Korean won)
Classification
I. Consideration transferred
Fair value of equity interest held before the business combination 1
Fair value of additional consideration transferred
￦
2
344,082
344,082
￦
Total
688,164
II. Identifiable assets and liabilities
Cash and cash equivalents
54,454
Trade and other receivables
304,552
Inventories
146,141
Property, plant, and equipment
699,803
Intangible assets
59,512
Investments in Subsidiary, Associates and Joint Ventures
68,839
Deferred income tax assets
62,733
47,370
Other financial assets
Trade and other payables
157,571
Borrowings
584,338
Defined benefit liability
30,108
Other financial liabilities
62,500
￦
Total
III. Goodwill
3
608,887
79,277
1
The Company re-estimated the fair value of its Samsung LED shares, which represents 50% ownership, as of April 1, 2012 and
recognized gain on disposal of shares in the amount of ￦28,684 million.
2
The Company distributed 269,867 of treasury shares to carry out the merger with Samsung LED and recognized a gain on
disposal of treasury shares in the amount of ￦233,705 million based on the estimation of fair value of the treasury shares.
3
Goodwill arising from the merger was recognized as the business combination will allow faster response to changes in the
domestic and international business environments and strengthen manufacturing competitiveness.
(4) Had Samsung LED been merged on January 1, 2012, the revenue would be increased by ￦293,273
million and net income would be decreased by ￦25,582 million. Revenue and net loss contributed by
Samsung LED division after the merger date of April 1, 2012 amount to ￦923,358 million and
￦ 10,527 million, respectively.
83
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(B) Mobile business of Cambridge Silicon Radio(“CSR”)
On October 4, 2012, the Company acquired tangible/intangible assets including patents, R&D workforce and equity
shares of 4.9% of the company from UK-based semiconductor company CSR and its subsidiaries in attempt to expand
its connectivity business such as Bluetooth, GPS and WiFi, etc. Consideration transferred amounts to $344 million
and there could be additional payment or refund of $10 million depending on the outcome of an ongoing R&D project.
Estimated fair value by weighted-average DCF is $113,000.
(1) Purchase price allocation
The following table summarizes the consideration paid for CSR and the amounts of the assets acquired recognized at
the acquisition date.
Amount
(In millions of Korean won)
Classification
I. Considerations transferred
￦
Cash and cash equivalents
383,498
II. Identifiable assets and liabilities
1,753
Cash and cash equivalents
304
Trade and other receivables
3,714
Property, Plant & Equipment
1
158,117
Intangible assets
Available-for-sales2
59,572
Long-term prepaid expenses
54,339
Other financial assets
15,779
Trade and other payables
374
Other financial liabilities
1,687
Total Identifiable net assets
￦
291,517
3
￦
91,981
III. Goodwill
1
This figure includes ￦102,442 million of Connectivity Semiconductor related patents and ￦55,675 million of other intangible
assets.
2
Samsung Electronics Europe Holdings (SEEH) acquired a 4.9% share in CSR plc according to the contract terms set by the
Company.
3
Goodwill arising from the acquisition was recognized as this transaction will allow faster response to changes in the domestic and
international business environments and strengthen manufacturing competitiveness.
84
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
37. Business Restructuring within Consolidated Entity
(A) Spin-off of LCD division
The Company established Samsung Display Corporation through a spin-off of the LCD segment during the year.
Name of the new company
Samsung Display Corporation
Headquarters location
Business
Date of Spin-off
Giheung-gu, Yongin-si, Gyeonggi-do
LCD
April 1, 2012
(B) Merger of Samsung Display, Samsung Mobile Display and S-LCD
On July 1, 2012, Samsung Display, a subsidiary, merged with two other subsidiaries: Samsung Mobile Display and SLCD.
(1) Overview of merged companies
Samsung Mobile Display
Yong-In, Gyeonggi-do
Soo-in Cho
Unlisted company
Associates
Headquarters location
Representative director
Classification of the acquired company
Relationship with the Company
S-LCD
Asan, Chung-Nam
Dong-geon Park
Unlisted company
Subsidiary
(2) Share exchange ratio and distribution
Type
Name
Merger Ratio
Acquiring Company
Acquired Company
Acquired Company
Samsung Display
1
Samsung Mobile Display
1.6487702
S-LCD
-
Samsung Display did not distribute common shares of Samsung Display as a result of its 100% ownership of S-LCD.
Acquired assets and liabilities were recognized at book value in the consolidated financial statements as the
acquisition is a business combination under common control. As a result, the Company does not recognize an
additional goodwill.
(C) Merger of Samsung Medison and Prosonic
On September 1, 2012, Samsung Medison merged with Prosonic. The merger was between subsidiaries of the same
controlling company.
(1) Overview of merged companies
Prosonic
Headquarters location
Gyeong-ju, Gyeongsangbuk-do
Representative director
Won Gil Son
Classification of the acquired company
Unlisted company
Relationship with the Company
Subsidiary
85
Samsung Electronics Co., Ltd. and Subsidiaries
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(2) Share exchange ratio and distribution
Type
Name
Acquiring Company
Acquired Company
Samsung Medison
Prosonic
1
17.5971363
Merger Ratio
The Company received 10,030,367 of newly issued common shares from Samsung Medison in exchange for 570,000
common shares of Prosonic which were previously owned by the Company. Acquired assets and liabilities were
recognized at book value in the consolidated financial statements as the acquisition is a merger between subsidiaries.
There is no additional goodwill.
(D) Others
(1) Merger of Samsung Electronics Asia Holdings(‘SEAH’) and Samsung Asia Private(‘SAPL’)
On July 1, 2012, SEAH merged with SAPL and changed the company name to SAPL. The merger was between
subsidiaries of the same controlling company and the accounting treatment for the merger was based on the carrying
value in the consolidated financial statements. The merger did not result in the recognition of goodwill.
(2) Acquisition of SEHF Korea
On August 13, 2012, the Company acquired 100% ownership of SEHF Korea, previously a subsidiary of Samsung
Electronics Hainan Fiberoptics (SEHF). SEHF is a subsidiary of the Company.
Subsequently the Company merged SEHF Korea on December 1, 2012 to maximize business synergies. Acquired
assets and liabilities of SEHF Korea were recognized at book value in the consolidated financial statements as the
acquisition is a merger between parent company and subsidiary. There is no additional goodwill.
38. Subsequent Events
(A) Merger within Subsidiaries
On January 1, 2013, SEMES, a subsidiary of SEC, merged with SECRON and GES in order to maximize synergies
and enhance the competitiveness in the semiconductor/LCD equipment business.
(1) Overview of the acquired company
Headquarters location
Representative director
Classification of the acquired company
Relationship with the Company
SECRON
Cheonan-si, Chungcheongnam-do
Jae-kyung Lee
Unlisted company
Associates
GES
Hwaseong-si, Gyeonggi-do
Min-seok Han
Unlisted company
Associates
(2) Share exchange ratio and distribution
Type
Name
Merger Ratio
Acquiring Company
Acquired Company
Acquired Company
SEMES
1
SECRON
0.4473688
GES
0.7684500
86